With sentiment improving and some inflation data coming in softer, is there a setup for a year-end 'melt-up' in equities, especially if retail participation increases? Or are we still facing too many macro headwinds?
Year-end rallies are common, but a full-blown 'melt-up' seems aggressive given global economic uncertainties. I'm more in the 'modest gains' camp.
If earnings continue to surprise positively, then absolutely. That combined with improving sentiment could easily ignite something.
The 'melt-up' narrative always pops up this time of year. Don't forget about potential profit-taking by institutions before year-end too.
A melt-up is possible, but I'm not convinced retail can move the needle enough on its own. Institutional money will dictate the real direction.
Hard to ignore the macro headwinds like rate hikes still on the table. A melt-up feels more like wishful thinking right now than a probable outcome.