The bears have literally disappeared
Wow, I know things are better than they were one year ago but are they so dramatically better with little downside risk? According to stock market newsletter writers the answer is yes. The level of Bears in today’s Investors Intelligence reading fell to 15.6% from 16.7% last week and is now at the lowest level since April 1987. Back then the bulls were right for another 6 months and then something bad happened. Combine this sentiment reading with the VIX at 20 and 2010 will be interesting, especially with the very likely prospect of higher interest rates. Bulls are at 51.1% and those expecting a correction but are long term bullish total 33.3%. Ahead of tomorrow’s PMI manufacturing index in China, the Yuan spiked (relatively speaking) upward to the highest level in 2 1/2 months. We’ll see if this is an end of yr anomaly or another step by the Chinese government to cool things down. The Chicago PMI and 7 yr note auction highlight the news flow of the day.
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December 30th, 2009 at 10:20 am
These past few months have been challenging for this bear only because the case for remaining so has required considerable calm in recognizing that, absolutely nothing has developed to nullify one bit of negative technical evidence. With confirmation of the bearish case remaining entirely intact, the fear now is some sudden panic could lead to several consecutive days trading where circuit breaker limits are rapidly reached, making it extraordinarily difficult for a good many longs to satisfactorily cover their exposure. Obviously, this is not something predictable. Yet to fear it seems especially prudent at a time when talk of sovereign default reaching all the way to the U.S. Treasury has entered into the mix.
December 30th, 2009 at 12:17 pm
The daily Feb. Crude Oil chart looks like it gave the market the finger yesterday!
December 30th, 2009 at 12:46 pm
Between the possibility of higher rates puncturing the bubble and the possibility of a double dip, you’d think there would be room for a little more skepticism… my guess is the bears are just hibernating in their caves.
As you point out, in 1987 the market ground on for another six months. I give this one significantly less time.
December 30th, 2009 at 5:37 pm
This bear hasn’t disappeared. Interest rates and energy prices continue to head higher. Christmas shopping season finished (should see a drop in temp work help from out of school kids), colder weather throughout much of the U.S. and higher interest rates, higher energy bills all should put a nice damper on upcoming home sales numbers as well as refis…as Rosenberg said this Market has already priced in a Frickin’ Nirvana..
So, as the Fed gets its wish for higher Inflation you have to ask how much more stimulus is coming… the Fed is suppose (I say ‘suppose’) to be finished with it’s purchase of mortgage backed securities in March… and it looks like the bond market is pricing this in.
November elections upcoming should give some pause for further Federal stimulus plan(s) that are not creating the kinds of jobs for any sustainable recovery.
Hopefully we get a nice blowoff top to this Bear Market Rally…
December 30th, 2009 at 6:22 pm
Bears haven’t disappeared, they’re just hibernatin’! I would point out that bearish sentiment for the economy is not the same as bearish actions in the market. While I have an overall bearish sentiment on the economy still (and the pain that us working class folks will feel over the next many years), i am not trying to push against the freight train that this rally has been in the markets. Stubbornness will make you poor really really quickly. I lucked out holding a lot of reflation stocks since late march/early april and have been taking money out lately, hoping for another pullback to buy more high dividend yield stocks with constant demand, the ability to control supply and set prices to an extent, and strong balance sheets to weather the crisis(es). I thought that would happen in October, but it didn’t. It just sort of stalled and eked a little higher. Still, my quant indicators have mostly flipped back to slightly overvalued overall market currently, and a correction is due. I don’t think i’ll try to short, though. I learned a hard lesson last year that this isn’t exactly a free or fair market anymore and you could “wake up on the wrong side of the Fed.”
December 30th, 2009 at 6:27 pm
I’ll be curious about what it reads; post Jan1. The real Capitulation was on the “Christmas rally”. The problem is that there are a ton of people saying “Big Drop” in Jan. So they are coming back.
So, we could get a nice little pullback into jan earnings, that will get the bears back, and it will be off to the races again.
Of course the same could have been said last Jan.
December 30th, 2009 at 6:46 pm
I’ll be bold here.
We won’t have a meaningful drop until May/June timeframe. This little bit of animal spirits has more to run.
So… the adage is true for 2010, sell in May and go away.
Chuck
December 31st, 2009 at 3:39 pm
“Wow, I know things are better than they were one year ago but are they so dramatically better with little downside risk?”
Things are better if you’re in banking, finance, or insurance. These industries employ some fraction of all American workers. For the rest of us, not so much. I’m just lucky I was only out of work six months. I know plenty who are coming up on a year and about to lose their UI benefit.
So, yay, 2010?
Look, 99% of us are not Wall St. playas or money pundits and are at the end of our collective ropes with not even a “thank you” or a reach-around from the banksters for getting to play market mover with bailout money.
January 1st, 2010 at 3:08 pm
My own anecdotal canvase of sentiment tells me that thing the most people want the most STILL is a substantial correction so they can get in on the ride. This has been and continues to be the theme. So this will not happen….not until they capitulate and get on board…. they have been scrambling on since the July fakeout true, but the apple is not yet ripe… May is a good guess….then the prospect of divided govt. is going to be very good for the market….and the country, leading to a strong year’s end…