More Supporting Evidence For The Bulls

I want the stock market to go down because I want to be able to buy stocks at better valuations. I don't believe stocks are set up for good long term returns, especially given that we are headed into a slowdown. But the evidence does not support what I want in the short term.

Sentiment still seems to be too bearish. Rydex traders have barely budged and neither have newsletters. From Marketwatch:
Consider the average recommended equity exposure among a subset of short-term stock market timers tracked by the Hulbert Financial Digest (as measured by the Hulbert Stock Newsletter Sentiment Index, or HSNSI). As of the close on Friday, July 2, this average stood at minus 1.8% -- which meant that these short-term market timers on average were completely out of any long positions and allocating 1.8% of their equity portfolios to going short.
As of the close on Friday, July 9, one week later, with the Dow 512 points higher, the HSNSI stood at minus 6.5%, or some five percentage points lower.
In other words, the average short-term market timer reacted to this 512-point rally by becoming even more short the market than he was before the rally started.


Anonymous said...

Anonymous Anonymous said...

I think c runs up in advance of earnings and off the results of other financial results.

could hit 4.5 before July 16

i am long and add to pullbacks

June 30, 2010 10:51 AM

This stuff is too easy for me =)

Onlooker said...

Yes, the bearishness of the RYDEX traders is probably the one factor yelling at me not to get short here (and has kept me from being short to this point). These people are very bearish and are rarely, if ever, right when at this kind of extreme position.

They seem to be just the fuel this market needs to go up at this point.

On the other hand I just can't see being long here either, even though it seems that we may end up testing the 1140-50 area before this is over. I am long some miners and gold though.