Steve Eisman, the investor known for betting against the housing market before the 2008 financial crisis, is raising concerns about the health of today’s rally in the S&P 500.
In a new podcast on his YouTube channel, Eisman, known as the ‘Big Short’ investor, says that while the S&P 500 is hovering near record levels, the underlying momentum doesn’t match the headline highs.
He points to a select number of stocks carrying the market as the reason for his caution.
“The market feels tired to me, despite the fact that it is hovering near new highs. Now, how do I know it’s tired? Less than 60% of the S&P 500 is above their 50-day moving average. That’s a technical term, but what it really means is the market has become more and more narrow, and this trend is not healthy in the long term.”
He notes that his call does not necessarily mean that a big correction is on the horizon, but he warns that the tone of daily trading is uneven, with a lot of names printing red ink even during up days for the S&P 500.
“Maybe what is happening is that the market is consolidating and treading water before the next move, but it does feel tired. When I look at my screen on up days, there is a lot of red.”
As of Friday’s close, the S&P 500 is hovering at 6,643, a less than 1% from its all-time high of 6,698.
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