A recent Substack post from popular investor Michael Burry pointed to an unusual stock-market streak as another reason investors should be careful. More specifically, Wednesday was the 182nd straight trading session without a day when at least 80% of New York Stock Exchange (ICE) trading volume came from falling stocks, according to research from BTIG technical strategist Jonathan Krinsky. This is the longest stretch in at least 30 years and beats the previous record by nearly 50 trading days.
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At first glance, this may not sound very important. However, Krinsky points out that over the past three decades, every single calendar year has still had at least five days where 80% or more of NYSE trading volume came from declining stocks. So even in normal years, there are usually multiple “heavy selling” days. While this does not automatically mean that a crash is coming, Burry sees this lack of widespread selling as a possible warning sign that investors may have become too comfortable or too confident.
In addition, he has repeatedly questioned whether the massive spending on artificial intelligence can realistically continue to generate enough demand and profits to justify today’s high expectations. As part of that view, he has also taken bearish positions against some of the biggest companies benefiting from the AI boom.
A Market Reversal May Not Happen Right Away
Nevertheless, it is worth noting that Burry is not saying that a market reversal has to happen right away. Instead, he emphasized that major market cycles usually take a long time to fully play out. As a result, trying to predict the exact turning point is extremely difficult and can be misleading.
For that reason, his main warning focuses on leverage. When investors use borrowed money, even a temporary downturn can force them to sell at the wrong time, sometimes before their long-term view has a chance to work out. Therefore, Burry warns that investors should be cautious with excessive borrowing during this unusually calm market.
Is ICE Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on ICE stock based on 12 Buys, one Hold, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average ICE price target of $185.62 per share implies 22.6% upside potential. (See ICE Stock Forecast).
