The current rally is one of the most hated rallies I have ever seen. Most market participants can spout a laundry list of reasons why this market should go down, yet the market is within spitting distance of its recent highs. The situation does indeed seem dire, but a hated market that rallies is very bullish.
This weekend I watched numerous videos of hedge fund managers discussing the macroeconomic situation at the CNBC Delivering Alpha Conference. The participants were undoubtedly smart and their dire forecasts were backed with convincing arguments that made me want to climb into a bunker. I had to remind myself that the best buying opportunities tend to occur when the crowd is negative and the bear case seems most convincing.
Even if the bear case turns out to be correct it is likely that market participants will need to cycle back towards optimism before the next leg down occurs. We are certainly not there yet.