Central Markets by Robert Lloyd, CFA

The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the  information cannot be guaranteed. All opinions and outlooks are subject to change.

  • Robert Lloyd, CFA

Market Extremes

Updated: Dec 30, 2020

  • Some market indicators are pointing to an imminent stock market top

  • While not great timing tools, they are a warning to investors

  • The Fed, Congress and Vaccine news is encouraging

  • London shutting down is a bad sign for potential US policy

1. Indicators of options trading show extremely high levels of speculation (SentimentTrader.com)




2. Broad Market Conditions Show Sentiment Easing (CNN)



3. Broad Market Conditions: Record High Valuation (gurufocus.com)


Record high Total Market Cap to GDP ratios – the market has never been this expensive

Note: Valuation is not a timing tool!


4. S&P 500: Overbought and Overextended: (LIWM research)


The S&P 500 is extremely extended to the upside, similar to 2018 and early 2020, which both resulted in short term sell-offs. Obviously, 2020’s bear market was triggered by Covid-19, but 2018’s had no similar catalyst.


5. Tesla: A sign of the times...(LIWM research)


Market capitalization passes $500 billion as it gets ready to join the S&P 500. The stock no longer represents a car company, but rather a “concept” stock and so is not tied to any earthly valuation metric. There are other stocks that will exemplify this cycle’s mania, but this will be the one we remember the most.

Now that TSLA is part of the S&P 500, Index buyers are invested. Where are the next buyers going to come from?


6. COVID Wild-Card: Shutdowns NY, CA, and now London (Covid Tracking Project)


New York and California make up 21% of total US GDP; stay at home orders are a problem.

The UK shutdown and travel ban are concerning.

Maybe a peak forming! Hopefully, yes.


7. Concluding Remarks

  • Small stimulus bill approved 12/20/2020: $900 billion. This is helpful.

  • Fed Stimulus slightly supportive; feeding ~$120 billion in liquidity each month.

  • Covid infections in the US have not peaked, yet.

  • Vaccines are getting distributed.

There is tremendous hope that the new vaccines will stop the spread of Covid-19 and allow the country to normalize. The stock market is counting on that.


Good luck out there!



Robert Lloyd, CFA® is President and Chief Investment Officer of Lloyds Intrepid Wealth Management, and author of the book CENTRAL MARKETS. Since 1994, he has held positions as a trader, analyst, portfolio manager, and wealth manager while working at Invesco, CCM Opportunistic Advisors, and Merrill Lynch. In another life, he served 8 years in the U.S. Navy as a Naval Flight Officer flying in the S-3B Viking. For a complete resumé, visit his profile at LinkedIn.


Lloyd holds a BBA from the University of Notre Dame and an MBA from the University of Chicago.


Lloyd is a Chartered Financial Analyst.

Lloyds Intrepid LLC is doing business as Lloyds Intrepid Wealth Management. Lloyds Intrepid LLC offers investment advisory services in the State of Texas where registered and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Lloyds Intrepid LLC and its advisers do not provide legal, tax or accounting advice. Lloyds Intrepid LLC formulates retirement plans, investment strategies, portfolio construction and investment due diligence for clients with signed investment advisory agreements with us. The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the information cannot be guaranteed. All opinions and outlooks are subject to change.

© 2020 Lloyds Intrepid LLC



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