Want to get a sense of how eager investors are to buy into a runaway stock market? Then look no further than the insane action recently in little known Texas-based health care tech company Signal Advance (SIGL).
Shares of the company at one point late last week were up 1,500% over a 24-hour period, points out Deutsche Bank strategist Jim Reid. It brought Signal Advance’s market cap to $100 million from $7 million during that stretch. The wild move to the upside follows a Jan. 7 tweet (below) from Tesla founder Elon Musk to “Use Signal.”
What Musk was referencing, however, was for people to use WhatsApp rival messaging platform Signal. That Signal is not a public company. And Signal Advance was clearly not top of mind for Musk.
Oddly, despite what is clearly a case of mistaken ticker identity shares of Signal Advance gained 332% on Monday. Signal Advance didn’t return Yahoo Finance’s request for comment on its stock price movement.
Such investor enthusiasm to blindly buy shares in a micro-cap company — simply because of a tweet from the world’s richest person (amid a wild move in shares of Tesla this past year) — underscores the frothiness in markets at present.
“In years to come we’ll know whether the 2020-21 period saw a historic asset price bubble the equivalent of say 1929 or 2000. If indeed it is eventually proved we were in one, one story that may capture attention [is the move in Signal Advance],” Reid said.
Reid isn’t alone on Wall Street in beginning to get concerned that markets have gotten too hot, especially as the COVID-19 pandemic continues to weigh on economic growth.
“In particular we know we’ve seen sentiment get very giddy over the last month as the Investors Intelligence figure saw Bulls rise above 60 and its spread to Bears above 40. The AAII [American Association of Individual Investors] numbers finally saw Bulls get back above the level of Bears with the former now at the 2nd highest level since January 2018. We also saw multi decade lows in put/call ratios and the Citi Panic/Euphoria index got to 4 times the euphoria threshold,” pointed out Bleakley Advisory Group Chief Investment Officer Peter Boockvar in a note to clients.
Boockvar added, “I now have Sir John Templeton ringing in my ear. Our clients are long, I am long but as a student of history, of markets, of market moods, it is really hard not to have an antenna up with the current market waters we are swimming in, in terms of this euphoric ebullience.”
Meanwhile, new data out of Deutsche Bank shows the last two months of 2020 saw the largest flow into equity funds on record over such a period. Further, equities as a percentage of assets under management stood at the second largest during a 10-year measurement period constructed by Deutsche Bank.
The bullishness on equities dovetails with a surge in bitcoin prices to above $40,000 in recent weeks and strong upside moves into economically sensitive metals copper and silver. Most on Wall Street still stop short of calling the asset buying binge this month a mania, but no doubt their concern is growing on the sustainability of the gains.
“Frankly, the fundamentals of the market still look good. I think what is a little bit jarring — maybe alarming — is the rate of interest in the market we saw last year,” said J.P. Morgan Asset Management global market strategist Samantha Azzarello on Yahoo Finance Live. “It doesn’t feel congruent [with all the turmoil].”