The Bull Case

Recently, it has paid to buy weakness and sell strength. But a decent case can be made for a continuation higher:

• The American Association of Individual Investor's survey is showing that individuals are extremely pessimistic with bears outnumbering bulls by 14%. It is even more staggering that this is occurring as the S&P 500 is a mere 2% from its highs.


• The put/call ratios are throwing off buy signals. Despite the 20 point bounce in the S&P 500 we saw a continuation of put activity yesterday.


• The market is still slightly oversold and has a long way to go before it becomes overbought.


• Bullishness on the Investors Intelligence survey has fallen by 10% recently.

I want the market to go down because I don't like the valuations I am seeing. Earlier in the year I was able to buy defensive stocks cheaply but those stocks have moved to a fair valuation, leaving me with slim pickings. I will likely be moving to the sidelines shortly but I see little reason to short the market with the current bearish sentiment.