Getting Constructive

For the first time in a long time I am sensing a lot of bearishness out there. It has become difficult to find a bull. I prefer to invest in this type of environment because stocks are no longer priced to perfection. The statistics are not yet lining up for the long side but they are starting to get there.

If we get another down day the market will be oversold on a very short term basis. We have seen heavy put buying for two days now and another day of this should have us primed for a rebound. However, this oversold reading won't last for long and to get good oversold readings we will need to go down further.

I am torn because my sense is that I should start getting more aggressive on the long side but the numbers are not quite there yet. It is likely that I will pick up the pace of buying into further declines but still hold back until the numbers line up. Other than my short out of the money put positions, I am less than 20% invested. This leaves me with a lot of room.

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