Open Wide and Say 'Uh Oh.' The Last Buyers Just Arrived for Private Markets.
Remember the drill about dentists? Well, German dentists may be a double tell for one area of the market.
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Long-time readers will have heard me say this before but my mentor in this business used to say that foreigners and dentists were the last to buy.
You might recall in January 2022 I noted this because there had been a gentleman on Twitter whose bio stated he was a dentist. He spent an entire weekend arguing with me about how great the market was. I disagreed. At the time I felt compelled to tell you this story. It turns out the dentist should have spent a bit more time drilling teeth than buying stocks in January 2022. I never did hear from him again.
So why do I bring this up today? No, there are no dentists arguing with me but there has been much discussion of late about private market investing. We’ve looked at the charts of all those companies: Blue Owl (OWL) , Ares (ARCC) , Blackstone (BX) , etc. And I have noted they look just like the software stocks.
Bloomberg had an article this week about a group of German dentists — yes foreign dentists!! — who had invested in private loans and stakes in unlisted companies. It seems they have now lost about half their money, which was over one billion euros.
There are few things you can count on in markets, but it does seem that Justin (Mamis) was correct: foreigners and dentists are the last to buy.
We got the tech rally Wednesday and the 493 mostly pulled back. Oh I know no one is focused on the 493 now that growth stocks rallied but it’s true. Breadth wasn’t great. Upside volume was at 55% on the NYSE. So the Either/Or Market remains undefeated.
But let’s talk about sentiment. For two weeks I have been harping away about the options ratios and how folks seem to be so bearish using both the ISE Call/Put ratio and the CBOE put/call ratio. The 10-day moving average of both are now nearing the same spot they were during the Tariff Tantrum last year. Bearishness in tech abounds.
How do I know it can be isolated to tech/growth stocks? First of all, very little else has come down. But then a day like Wednesday rolls around and everyone is seemingly feeling better about tech/growth stocks because the ISE equity call/put ratio jumped up to 2.42, which is the highest reading in a month.
Not to be left out the CBOE’s put/call ratio (total) fell to 0.78. It was the lowest reading since January 27. So yes I think growth stabilized and rallied and folks felt better about the market. Let me note that the 10-day moving average lines are still extreme because one day will not change them but you can see how quickly sentiment changes when it comes to growth stocks.
And we know this because the much slower moving, not-so-trading-oriented Investors Intelligence bulls lifted one point to 55.6% and the bears actually fell to 14.8%, the lowest since late October! The Bull/Bear Ratio has barely budged in weeks. It remains elevated.
I will close with a word on software stocks, only because they seem to be ruling the sentiment in the market. After hours there were several stocks in that group that reported earnings and most were down after their reports.
This is the period where we should see a lot of back and forth, a lot of up and down. This is the period where we will see if even if there is bad news the stocks can stop making lower lows. They ought to begin to sort themselves out in the coming weeks. Well, as long as the foreign dentists don’t invest in them!
