We have seen some bullish action recently, but will it stick?
According to Mark Hulbert, ” one of the distinguishing characteristics of the former is an excessive eagerness to jump on the bullish bandwagon. At the beginnings of the latter, in contrast, advisers are more reticent — turning bullish more slowly and begrudgingly.”
He also looked at four things:
1- stock market exposure by short term market timers
2-newsletter sentiment conducted by Investors Intelligence
3-The survey of individual investors conducted by the American Association of Individual Investors
4-The CBOE’s Volatility Index which reflects expectations of future volatility among options traders and which is often referred to as an “investor fear gauge.”
Using March 9th as the level that might be the bottom and in an effort to make a long story short and also validate what I do for a living, the study leaves you flat and just as confused. Two indicators could make a case for a new bull market and two suggest that this is just a bear market rally. I will leave it to the pundits to make something out of this that it is not, as they ponder their navel lint and opine “deep market thoughts” and constantly repeat their favorite phrase ” we are in a bottoming process and things are great if you have a long term horizon.” Maybe so, but you won’t find buy and hold here. You won’t even see short and hold which has been my passion in this market, too many drunken portfolio managers that are dazed and confused themselves, it’s wacky time at the ranch. Keystone cops on mescaline.
Guys make a living with these ‘studies’, hell I could grab four statistics or data points and try to analyze them, the end result would be more confusion. Put twelve economists in a room and you will get thirteen opinions. I am not minimizing hard work and reserch, I spend more time than anyone I know trying to ‘figure it out’, but give me a break.
Point of all this, stay short term, take profits and don’t superimpose your opinion on the market. This was the week to take a chunk of your longs off the table.