I was speaking to a friend who is a well known, well regarded Technician. She stated: “I dont know anyone who is bearish . . . Even Nouriel Roubini flipped bullish.”

I thought that was an interesting observation.

While I am not sure who is bearish (Hussman, Shilling, Edwards, Faber, Belkin & Rogers) I do think this rally is rather hated, and has been for many quarters.

Here wee are with stocks making multi-year highs.

“Buy Strength” I was always taught . . . “Sell weakness.” Yet it seems no one wants to buy strength — people want to buy lower.


That’s our open thread for tonight: Where are the Bears? And what does this mean for the next 12 months of equity action?

Category: Markets, Psychology, Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

79 Responses to “Open Thread: “Where Are the Bears?””

  1. Winston Munn says:

    The problem is that the world is still ending – it’s just ending a lot slower than was thought.

  2. MayorQuimby says:

    VERY tough place to trade OR invest.

    On one hand – tops are often made when people are most bullish.

    On the other – why would anyone sell now?

    I wouldn’t recommend people TAKE positions right now because everything is super pricey. But at the same time, that could be a contrary indicator…

    The fundamentals are still very weak which could mean more rally or it could mean we are in for a vicious sell-off all at once.

    Hahahaha…it’s super tough right now. Some will win, many will lose. Or lose out.

    Anyways -good luck. You’ll need it.

    Or not.

  3. MayorQuimby says:

    Oh yeah – one more thing. I think a good top indicator is when bulls are giddy with the ease with which they are making money. I don’t think we’re there yet but another 4 or 5% could get us there.

    But then again – yields are rising and bonds selling off. If that continues, bonds will gain appeal at equities’ expense. Not at these rates but I’d say 2.5% on the ten is entirely feasible and could cause some reallocation.

  4. Sechel says:

    Perhaps two many accounts are governed by Jan 1st to Dec. 31st performance. It’s a new year and the starting gates have opened.

  5. yon QOTD..

    It is the mark of an educated mind to be able to entertain a thought without accepting it.

    —Aristotle (384 BC – 322 BC)

    from Denninger..

    It’s 2008 Again

    The cheering is all over the media this morning, especially CNBC.

    The charts? They look stellar, especially the Nasdaq….

    ….There’s a decent shot that this move has more legs in it, just as it did in late 2007 and before that, in late 1999 and early 2000.

    But there’s a very high correlation between these sorts of rotational moves, which have shown up before both major tops in the last 20 years, and that event down the road.

    This is not a crash call and it is certainly is not a call to “short everything” today. But it is a caution that when coupled with the fiscal situation here, in Europe and in Japan, that the “strong market” meme that has taken over is in fact, on the internals, becoming too extended and is now narrowing down, which makes it increasingly dangerous to continue to dance.”

    about sums it up..

  6. robert d says:

    BR: you’re still the bear on the banks, or at least you were when BAC was 5.12 not more than 7 weeks ago. When I commented soon afterward
    you beat me up by saying that I had averaged down from 47. WRONG. My Buy slip says 5.15. As I said then and again, you have invested your reputation in the collapse of the financial system. Sorry, but it ain’t happening even in Europe. If it did, you would not be working either.

    Separately, I believe gold is failing…..the gold stocks have been fabulous shorts. As everyone knows, gold has been almost straight up since the
    European Central Banks unloaded about 1/3 of their reserves at prices between 255 and 300 12 years ago. In the last year these same banks have loaded up again at 1500-1900 an ounce. In my mind, with the economy clearly improving, gold is failing. I am bearish on gold.


    BR: Banks are the strongest sector in our technical ranking system. (BAC up 40% from the lows) However, Fundamentally, they are still problematic — that is why our clients dont own major financial money center banks.

    Over my career, strangers claiming to bottom tick stocks have more often than not been proven to be less than honest. Now that you have a blog, why not post your trading calls there , live in real time?

  7. Singmaster says:

    ECRI’s a bear.
    When’s the last time they were wrong?

  8. Pantmaker says:

    “Bears” are usually something that nervous investors who are long stocks in overheated markets obsess about. Think about it. What percentage of market participants really short stocks vs folks who buy long. The percentages are stupidly unbalanced in favor of longs. “Bears are getting killed…bears can’t pick the top…bears…bears..bears.” I think your friend’s observation represents the boots on the ground now and is one that not many people realize yet.

  9. CANDollar says:

    This is a fragile market. Volatility is low and hedges are cheap. There is a wide spectrum of potential triggers to selling. Sellers will find few buyers in an unforeseen trigger event because it will raise the spectres of other unknowns.

    All is underscored by the record debt.
    For example how robust is the American consumer? Housing “fixes” such as was announced today show the extent of the fragility.

  10. TapeReader says:

    The automated trading bots have been predominantly long recently. Buyers have been creating more demand than sellers have been creating supply.

    Here’s a post that goes into this a bit more in detail http://sceeto.com/blog/why-do-prices-go-up-because-there-are-more-buyers-than-sellers/

    Specifically it offers visual insight into what buying vs. selling looks like in the futures markets and the equity markets.

    BTW – The behavior of order flow within the futures markets is dramatically different than the behavior of order flow in the equity markets.

    Q: Why are their currently more buyers than sellers?
    A: I have no idea….it just is.

    Q: When will there be more sellers than buyers?
    A: We will know when their orders hit the tape. Which in today’s electronic markets is eons.

    Hope this helps.

  11. RW says:

    Relatively thin volume signals lack of commitment which is as good a description of my own stance as any: I’ve never left the market but I also have never completely dropped my hedges and am probably still carrying too much cash (short-term, hi-qual bonds actually)

    And so have underperformed but pretty much don’t give a damn; guess that’s what renewed respect for fat tails can do to you.

    So I’m still making money long but not as much.

    So what is that, bear lite?

  12. Orange14 says:

    There are certainly fewer value stocks these days but I think to be a bear at this point in time is to bury one’s head in the sand. There are consumers out there that are still buying stuff but it’s mainly middle to high end things. Most companies have shrunk their labor force and become more efficient. From my own perspective there will be modest growth this year and I believe equities will go up another 10% probably closing the year out at +15% which is a pretty nice return given minimal inflation. I know BR made a call against MSFT at the beginning of the year but that’s not looking too good these days. I also watched Bruce Berkowitz’s report to Fairholme shareholders yesterday (I took out may taxable account last year but left the IRA money alone) and he’s up I think about 15% so far this year. His bet on financials may finally pay off. As a retiree, I’m content to stay with 50% equities at this point.

  13. GeorgeBurnsWasRight says:

    Most of the days during the past several years the pattern has been that most of the move from one day to the next is made between sessions. That makes it hard for traders to profit from moves unless they’re able to correctly predict around the end of the day which direction the next day’s gap will be. Add in the second pattern of long, low volume melt-ups punctuated by unexpected heavy-volume declines and traders are either among the quick or the dead. And then the increasing correlation between all of the asset classes makes one wonder if the best strategy isn’t to just trade the S&P ETF. So my take is that trading is like flying on airlines these days- even if you get there safely there wasn’t much pleasure in the activity.

    Beyond that, I can’t add that much about who’s bearish because it like BR’s question about finding good hedge fund managers. I haven’t been able to figure out how to tell whose advice about the direction of the market is going to be accurate, so I’ve stopped paying attention to people who make those predictions.

  14. NoKidding says:

    As a stupid bear from late 2010 ti mid 2011, I wondered how the market would sustain itself.

    Now it looks to me like some important US numbers, like initial UE claims, auto sales and housing starts are sustaining flat or positive changes.

    Bearish folks love theBaltic dry index right now, but it seems to me that many of those ships have Greek issues.

  15. Futuredome says:

    2012 is going to be a good year for the US economy baring any disruptions. 2013, however, looks shaky right now as US austerity measures kick in. I would liquidate holdings probably in January of 2013.

  16. GetReal1 says:

    Where are the bears? They’re afraid to come out of hiding. Every time it looked good to short the market they got spanked by Big Ben.

  17. GeorgeBurnsWasRight says:

    This is of interest. Helene Meisler, a technical analyst at theStreet.com, conducted a non-scientific survey which I’d guess probably got a majority of responses from the retail folks about how what they were expecting in the near future. Less than 1 in 5 reported they were positioned for further gains, with rest split between people expecting a pullback of less than 5% and a smaller number expecting a larger decline.

    I find this interesting because the last I heard the “smart money” was slightly bearish and the “dumb money” was significantly, though not exuberantly, bullish. So either sentiment has changed, I was wrong and her responses drew from the “smart money” crowd, or else her survey sample was distorted in some way.


    BR: Helaine was the Technician I was referring to . . .

  18. Robespierre says:

    “Here wee are with stocks making multi-year highs.”

    Where have I read that before? Oh yes here (04/11):

    S&P Hits Multi-Year Highs, Reverse Head And Shoulders Pattern Triggers

    At that time (Apr 26, 2011) the S&P 500 was at: around 1360
    Then 6/2011 down to around 1260
    then 7/04/2011 up to around 1340
    then 8/15/2011 down to 1130
    And now: 1352

    So that last year April the S&P 500 was making multi-years-high at 1360 and a bit less than a year here we are again saying Bull Bull Bull multi-year-highs!!!

    So Bull? Bear? Who knows. All I know that the bull call I hear less than a year ago and didn’t pan out. But this is an election year and no amount of lipstick will be spare to make this pig look good…

  19. jaymaster says:

    Look for Austrian macro thinkers, or at least anti-Keynesians.

    Still bear-o-rama.

  20. JimmyDean says:

    I agree BR, this rally is hated and everyone I talk to is waiting for a correction. It certainly could correct, but with LTRO going full steam ahead and Fed committed to being easy and doing whatever it takes to save the banks (probably behind curve again) systemic risk should be in the background and thus I’d think correction would be shallow. 1305-1310 is support and 1291 area below that. Not at all sure it will drop back that far however. Could stall out here and churn sideways for a while, but I think once/if we make and hold new recovery highs, it could be off to the races. Equity fund flows are just starting to turn positive again after months of withdrawals, the longer we go without any earthquakes out of europe, the great the odds are that trend gathers steam.

  21. La Marque says:

    This dividend investor is not buying into “strength”. Dividend rates are compressed because all those CD and bondholders are running up the price of value stocks, along with all the new IRA money for 2012. When the correction comes, then dividend stocks will be fairly priced.

  22. dkelland says:

    What — somebody called?

    Are we in a secular bear or a secular bull? It’s one or the other. The two secular bears for which I have good data are the one that began in 1929 and the one that began in 1968. They tend to suggest that it’s still too soon for take-off. The CAPE of the market also suggests that it’s too early. Sentiment is also very strong, which is the only safe time to sell the market, which of course does not mean that it’s safe to sell the market because its strong. We’re up over 26% in about four months. Treasury yields have failed to follow the stocks higher, but that resistance is starting to buckle. A rapid rise in interest rates will end the scramble into stocks to earn income and push mortgage rates higher. The Euro is at 1.33, meaning that Europe cannot improve its international position enough to pay down the debts of Portugal and Greece. Either the Euro needs to drop, or the Euro needs to break up (drop a lot). Lastly, Chinese property is about to get smoked. Enough said.

  23. mwbugg says:

    Gotta climb a wall of worry and there is plenty to worry about. I’m pretty much fully invested, but I know I’m not smart enough to time the market successfully. Therefore, it’s mostly low cost indexes for me and hope for the best. To back up Pantmaker, I’ve never shorted a stock in my life although I did trim a position in SCHF and buy it back cheaper when Europe was going to heck. I’m afraid to do that now, but believe it will work sometime in the future. If only I knew when.

  24. thinkingbeard says:

    Irrational exuberance.

  25. andreas says:

    Bear or bull, i think that it don’t really matters. For me it is a rally into a secular bear market. I m a bear but no way i will not be investing in this rally. Will it last a few days, months?? I don’t know…

  26. tradeking13 says:

    I believe Felix Zulauf is still bearish.

  27. alanvw says:

    Let’s keep it simple shall we?

    Exhibit 1:
    Pull up a weekly chart of FBALX with 30-week moving average – note FBALX back above this zone week of Dec 19 – buy. Keep buying while this remains true

    Exhibit 2:
    Pull up a weekly chart of TLT with 30-week moving average – note TLT descending since FBALX ascending and now TLT trending towards breaking below the 30-week MA zone.

    For even more entertainment, repeat the above using a daily chart showing 30, 50 and 150 day simple moving averages – look at the spectacular trend change that happened around Dec 22 and the difference in these moving averages since then…a thing of beauty really. hate to say it but it sure looks alot like March of 2009…

    “Where are the bears and what does it mean for the next x months?” Who gives a rat’s ass…just watch the charts.

  28. V says:

    Sentiment changes quick these days, not surprising with everything moving together and sentiment a function of the mood of the interwebs.

  29. thinkingbeard says:

    Agree with V; volatility is lurking. Enjoy the Long and Strong, folks. Solution to high equity prices is high equity prices…

  30. tagyoureit says:

    Where are the bears? I’m right here. I closed my Mar SPY $125 long calls on the 6th. I don’t short because I’m not good at it, instead I sit out and watch the pros. I’ll never be rich, but hopefully, I won’t lose my shirt either. Maybe one day, if I ever have enough cash, I’ll pay one of BR’s peeps to manage my money.

  31. constantnormal says:

    Back on-topic … I am confident that something will arise to scare up a crop of bears … Prolly related to Greece, possibly to Iran … Which hints at oil … How high can oil run before it begins to scare folks?

    Bears are easy to round up … After all, it’s a “bear market” …

    Be patient …

  32. constantnormal says:

    Or another flash crash … These days, anything can happen …

  33. Randel says:

    This seems like squeamish money moving from bonds where folks think interest rates will rise to equities.

    Is a big bull loose? I am not so sure. Looking back when I was a college kid, there was an NBC story in summer 1982 of 1,000s of people lining up for 200-300 jobs at a Milwaukee manufacturer, AO Smith. The tv story was all about negativity and desparation. But, the real story was on the other side of the coin as it turns out: an old line manufacturer was hiring once again. Around that time, the Big Bull also showed up. I do not see those type of Milwaukee stories right now. I guess in today’s time frame you have to look at who just got beat up to see if they are again standing. Is Home Depot hiring? Are the big banks?

  34. Petey Wheatstraw says:

    Buy now, or be priced out forever. Your retirement is at stake, and you need to rebuild. Everybody is doing it, everybody can’t be wrong. Long term, stocks have never gone down. Here, hold this bag.

  35. Rightline says:

    Bears are huddled over by mish and the ever arrogant denninger who wants to flame BR for the unthinkable crime of being balanced.

    Biryini = too bullish too often. However, he has been calling for this tpe of action in his 4 phase theory. Says we are in stage 3 with investors starting to finally accept and believe the rally. He(naturally) looks for a strong 4th phase of exuberance to follow.

  36. neddyj says:

    it’d be embarassing for a bear to show him or herself right now, with the market on an astonishing run north…just as the bulls were absent from the mainstream media during the month of september 2011. i’m bearish, but a tall one (read: not short).

    this melt up is happening because the market has gotten numb to the bad news, not because the economies of the world are healthy. market likes to look around the bend, and right now it sees more of the same – to which it is numb.

    add that to some jobs numbers that appear to be better (we’ll see some revisions I’m sure), the shorts getting squeezed, the governments of the world jamming risk assets down our throats by QE-ing and talking down rates til the cows come home – and you have a recipe for a melt up.

    this bull market is in the weak / frail category – it is a sellers boycott (and a short sellers nightmare)…if this thing had volume, i’d be bullish.

  37. cmor says:

    AAII bullish sentiment jumped 7.8 percent since last week, now more than 1 standard deviation above the average… bearish sentiment nearly a std dev below average. Not *quite* a sell signal, but worth watching. I’m only partly in the market, and I’m thinking my next move will be to pull back, especially if we get further upside…

  38. Nacraphiliac says:

    Bearish? …after twelve years or so of looking into a chasm, your perspective gets a little off.

    There’s too many people who’ve still got to eat & way too many who’ve begun to develop a taste for chicken or pork & a LOT of people who’ve come to value their broadband connection at least as much as their next meal for overall economic demand to wane anytime soon unless the entire souffle were to collapse anew.

    Then, consider as well that there are too many assets dependent on homeostatis for chaos to be truly any more than a boogeyman but all must understand that a certain amount of variability keeps everyone’s interest in the charade.

    When the 2009 lows were not violated despite a undeniably credible European falling dominoes scenario, you had to figure the economy’s likely to interpret that as license to find some rationale to grow out of it’s petri dish again, like most living systems invariably do.

    Now, you can argue its wrong but being right is not the same as being profitable.

  39. wally says:

    Who is still bearish? The general public, I think, has still not bought into “recovery”… particularly those whose political philosophy tells them it can’t possibly be happening.
    We’re still not into the meat of the recovery yet. That will happen when construction finally heats up, as it is now just hinting at. Then the public may buy in and then we are more likely to have corrections or collapse. You can’t have a real stampede until the herd gets big enough.

  40. JimRino says:

    Sheesh Barry.
    You’re students read your blog.
    Especially the Market Sentiment stuff.
    Us long term 401k’ers are back in, because this is near the bottom for us.
    We’ll look for the euphoria and jump out then, but, we’re No Where Near Euphoria.

  41. MikeW says:

    I am struck by how many people still claim that US stocks are cheap, although they hardly seem so to me.

    Take JNJ – a dividend stalwart with a 3.5% yield, but it’s at a PE of over 18 in spite of the share price being little changed in a decade. Is that cheap?

    Now look at France’s big oil company, Total SA (TOT), in contrast. Up about 50% for the ten-year period, but with a PE of 7.7 and a dividend yield of 5.44%,

    So where are the bears?

    Overseas, apparently.

  42. park city skier says:

    I’m still bearish. It looks like IWM topped feb 3 @83.22, and than back tested feb 8 @83.21(cashed out). My take is IWM is the front car in the roller coster, it’s been looking at the drop but waiting for the rest of the cars to summit before the big drop . Since mid DEC this rally felt like a steady slow roller coster ride up to the apex. Fasten your seat belts, the fun part of the ride should start any day now. It’s the opposite of buying when blood is in the street. Plus the vix looks ready to roar!!!!!!

  43. park city skier says:

    Hi, dkelland. Secular bear is my call/guess. Double top on the right shoulder to be exact. Left was in 2000, head in 2007, Right 2011 and 2012. ~5yr from first bottom to top, ~3yrs from second bottom to double top. Next week the pay roll tax cut gridlock will get price in.

  44. Aaron says:

    In hibernation? Until May, maybe, when earnings for S&P 500 companies come in lower than the same quarter of the previous year? I could be wrong, though.

    By the way, on something completely off topic, how does someone come up with an investment process from an investment philosophy? For example, if I believe that I can’t predict either markets or corporate earnings, and neither can anyone else, how do I develop an investment process from such a statement? Would love to hear some responses…great blog, BR!

  45. gps says:

    I’m student of your article series ” Apprenticed Investor” . Your view on perma bulls and perma bears comes to my mind. Guys who’re perma bears missed historic 2009 rally and they’ve been hating the rally. Guys who missed were not ordinary people but the guys who spotted downturn. Unfortunately they’re not able to catch the rally or didn’t have the conviction that this rally would sustain. These folks spreads fear mongering and unfortunately investing public correlates main street to wall street. To my knowledge ( Based on things that are happening in India) , things that are good for main street are always bad for wall street (In India Dalal Street) and things that are bad for main street viz., Bank bailouts, bonus for useless boneheads are good for wall street. Most of the retail investors missed this rally and that’s the only reason why rally is yet to get tired. I guess it could continue for another 2 years and when crash happens make sure that retail investors would be fully invested in the markets.

  46. crunched says:

    I am. I am completely bearish. I think this this so-called ‘rally’ is an absolute joke that was born during the holidays when no one was trading and is being sustained only by anticipation of QE and the ES futures. Pull up a chart of XLF or any other popular ETF and the 30 minute chart pattern of the ES is identical. Coincidence? Very, very similar price action to what led up to the Flash Crash. No volume… the trade-bots basically inching the market higher, following the ES’s every move… until BANG, something happens and all the other robots trip over each other trying to be the first one out the door.

    Do people really think we’ll tack on another 20 – 30% from HERE? So what then… a forty, maybe fifty percent rise in the stock market in less than six months based on… nothing? Wake up people!

    In spite of the mess in Europe continuing to get worse, I suspect appearances will be contained for the time being… but I don’t think the coming recession here will be. QE or not, it won’t make sense to own stocks if there is negative growth. (It doesn’t make sense now, they’re over-valued)

    I predict a mild pullback in the stock market some time in the next couple of weeks where a ton of people follow CNBC’s advice and pile in… only to have the market completely fall apart by April.

    I am currently not long or short the market.

  47. howardoark says:

    I’m a bear. I made a lot of money (relative to my annual salary – I’m an engineer, so I’m not talking real money) 1998-2010 being bearish on stocks almost that entire time before going long (really Barry) in the Spring of 2009. I’ve been getting killed lately but I don’t trust Mr. Market. First of all, it’s rigged. Secondly, there isn’t enough money in it to support all the pensioners that are counting on it to support their golden years of bass fishing and world travel (or macaroni and cheese and heating the house above 60 degrees in the winter for that matter).

    My basic theory is that the baby boom generation needs to be bankrupted to force them to work into their 80s because there are too damn many of us for the following generations to support. So, all those pension funds need to be crushed and we have to have 30% inflation for four or five years (most pensions are only COLA’d for the first 3 or 4%). That’s not going to be good for stocks or for almost anything else.

  48. Investradamus says:

    looking at COT data for the S&P and the e-mini, it would seem the asset managers are uber bullish while the Dealers and leveraged money are short.


    Personally, I’m still a pessimist, but I recognize that’s there’s a difference between what I think the market should do, and what I think it will do. I haven’t lost faith yet in the HFTs, the Fed, and whoever else is actually still in the market to keep the rally monkey going. I have no conviction behind it though. I figure the market will continue to trade in a range somewhere between the Zero Hedge gloom and the CNBC pom pom squad.

  49. hdoggy says:

    This last wake up call worked. I hope we’re all tougher for it. It will only help us. If the next one is the big one, then bearish will be trite.

  50. hmsuter says:

    joe granville (89 years) and richard russel (86 years) are very bearish at this time.

  51. Expat says:

    Our financial system is an organized racket. Our politicians are corrupt. Volumes on the market are comically low. The entire world is in debt to everyone else and themselves. The US is on an international rampage of war, torture, and oppression. People are running out of food, clean water, clean air, and cheap energy.

    So, yeah, there are some latent bearish worries out there which affect most of the world. Sure, the 1% is chuckling as they ignore the law and ride this rally to new records wealth, but even they realize their Ponzi scheme is vulnerable.

    Barry, you seem to have been sipping the Kool-Aid lately. First, you’re a charter member of the We Love Hank Paulson Fan Club and now you scratch your head at the market. Could you please show me one or two things which are fundamentally healthy about the US or world economy that don’t involve printing, negation of law, or accounting fraud?


    BR: Saying someone who I totally disagree with is less of an asshole than I previously thought is hardly drinking the KoolAid

  52. Liquidity Trader says:

    I want to make an observation as a Professional money manager and a long time lurker here.

    The retail investors (aka the dumb money) have been extremely negative — I suspect they are projecting their own personal financial situations, hardly an objective way to deploy risk capital. This is not a criticism, its an observation relative to what my own HNW clients are saying to me.

    The performance driven professionals have had no choice but to climb on board the rally, lest they get left behind, suffer from career risk. They are long, but nervous (Ritholzt described himself as miserably long last month, and thats a great assessment).

    Read through the comments here — the amateurs are obviously underinvested, while the pros are much less so.


    BR: Note that when I flipped Bullish in March 2009, the comments here were insanely bearish in response. They are bearish again, but not nearly as much

  53. Patrick Neid says:

    I still think this chart resonates after all these years. Should it continue, we are making the 77-78 highs where we will fail yet again. Yes, this is the same chart I posted years ago as a template going forward. It works until it doesn’t.


  54. illoguy says:

    Investing wise, I carry baggage watching my mom lose fortunes hanging onto stocks and trying to grab that extra 10 percent.

    Got out of the market recently and (usually to my chagrin and dismay) usually get out too early.

    Enjoy the extra 10-15 percent.

  55. constantnormal says:


    Don’t forget Harry S Dent. He has a new crash book.

  56. constantnormal says:

    Perhaps, this increase in volatility is nothing more than the vampire squids dialing up the volatility in their HFT engines of mass profit creation. I saw where Blankfein was forced to accept “only” a $7M bonus for 2011 … So there are some Truly Hard Times out there on Wall $treet.

    But it’s A New Year, so they can call down to the engine room and tell them to dial up the volatility a bit. Volume seems to be getting lower, so that makes increasing the volatility an easier task to accomplish …

    But wait … If volume is getting lower, then perhaps all this happy talk is just talk, and the true bear population is MUCH larger than the ambient noise levels would have us believe … After all, BR, did you not recently note an increase in corporate insider sales?

    Or perhaps a genuine Invsible Black Swan has entered the picture — I know, redundant, by their nature Black Swans are supposed to be invisible, at least to those blinded by their preconceptions and world views — and is merely waiting for all us “smart traders” to decide it was only a noise outside, nothing to get worried about, and rush back into the market …

    Anyhow, I’m sure that everyone here has their hedges, their “portfolio insurance”, their credit default swaps, … perfectly placed, so there’s Nothing To Worry About, Right?

    Thank God that this is a “free and fair” market, eh? Just imagine if it were some kind of financially-engineered giant machine …

  57. slackful says:

    Fabulous comments so far. Loud buzzing sound is the crescendo of memes from the last 4 years. Every once in a while, the market drives home the point that it is completely, totally, unreservedly, infallibly….unpredictable. There is no signal in the data. But so far, the comments have been an absolutely lovely rendition of what’s viewable in the rear view mirror, mixed with the urban legends du jour. My personal fave: the bots. “HFT” must be dead from the stonings, nary a mention. Re Granville and Russell, absolutely my two favorite touts of all time, I still love reading them, even though they left me holding the bag back in 1979-82. I actually went to see Joe live, in 80, he plays the piano to illustrate market rhythms, what a show! And Richard, my favorite quote of his: “America is going to learn the lesson of compound interest…in REVERSE!” Except, he said it circa 1979, was at least 30 years early, if that. They were completely wrong at the biggest turning point in the last 80 years. Even though it’s unpredictable, the market generates wonderful entertainment values, and these two are at the top. I say, bravo! And Barry, you’re getting there :)

  58. constantnormal says:

    Transparency is vastly under-rated.

  59. JasRas says:

    Every person I speak with that isn’t in the financial business is bearish—even if they are hiring or expanding in their business. They see that as a unique, one-off instance.

    Finding a bunch of bulls in the technical corner is not an indicator of much of anything…the market’s rallied for the last 12 weeks and all the charts look bullish…

    Short term it’s overbought, but the longer term charts look good too…so you’ve got bullish technicians. Fundamental guys are less so. They aren’t impressed with the earnings season. The ratio of beats is off. The number of cos. beating both rev and earn is way down…outlooks are murky for the most part. So fundamental guys are not really bullish. Economists are downright bearish from what I can tell. Their verbiage is full of descriptives like “headwinds”….They see the across the board 10% budget cut in 2013 as a huge negative. The budget, the deficit, the debt, …. They are living up to the name Dismal–because right now is as good as it gets…

    My put/call ratio is creeping up, so someone is preparing for a correction, which has meant in the past the correction isn’t very deep b/c it was anticipated vs. a surprise.

    I think if you talk to a more “normal” sample, you’d see that it is still pretty bearish right now and people think they’re quite smart in their bonds funds.

  60. Expat says:

    In all fairness, I did say “sipping”, and we all went through this already on the other article. Nobody really wants a nuanced villain; we want a fairy tale witch, black and white protagonists, and a clear vision of good verus evil. Paulson is most likely not a serial killer, child rapist, or Colombian drug lord, but we don’t want to know that.

    So, keep up the good work on markets and leave us our biases, hypocritical morality, and preconceived notions. In the end, we’ll all feel better!

  61. Francois says:

    When the stability of the financial system depend on if so-and-so cheap ass European political micro-party will accept Bailout Draft version 198.23 (and counting), there are some valid reasons to be, if not bearish, at the very least, trigger happy…unless one is invested for the really long term. But apart from real investors like Jeremy Grantham, who practices this kind of discipline anymore?

  62. JasRas says:

    Other thoughts on Bearish and bullish bias…

    Too many people say housing recovery is “forever” away…lest you forget…when you were a first time homebuyer, you drove past those huge, dilapidated houses in the “old” neighborhoods. Why? They were old, fixer uppers, and still out of your price range with no kids in the neighborhood… THAT is what the baby boomers own and want to sell (i.e.. the shadow inventory) You will miss the housing recovery if you refuse to segment the market (i.e. the market is not the Case-Shiller Index) The new entrants into the housing market are young and buy starter homes. And perhaps that is why the home building stocks are doing ok–they build the vinyl village you despise, but is full of newlyweds with baby bumps, immigrants that you detest, and people rebuilding their lives/credit on a reset income level. Point is…there will be a huge overhang of excess housing for a long time. But it is housing NO ONE WANTS… Talk to a realtor sometime about your metro area…ask them for the months supply at different price points. At some price points there are shortages, others there is still 2-3 years worth.

    I love that everyone follows general housing indices and thinks it is a dead play.

    Same for the stock market…everyone is looking for an economy that is carbon copy of pre-2008 and all Goldylocks. Well, you know what? We’re in the midst of creative destruction, and I assure you it will not look like it did before. And what I see that makes it investable domestically is that everyone is still looking for boogymen…Well, real life isn’t like horror flicks. Sometimes Jason and Michael Myers are just plain dead and don’t come back.

    I also love people not investing because “it’s rigged” OMG!!! Did you not take any history in your life? The game of money has always been “rigged” to benefit those who recognize that fact. There is no time in history where it was a noble endeavor… Remember, Jack Kennedy was the first SEC chairman because he was known as the biggest cheater and knew how all the rules were broken! So get off your fairy tale dream and simply recognize the fact. Then decide to make money on the base assumption that rich, powerful people in power (called politicians) do not let rich, powerful people in business (called fat cats) fail in a disastrous way. The world learned that lesson by witnessing what happens when you have an axe to grind like Hank Paulson did with Dick Fuld. End of story.

    Learn lessons and profit from them…

  63. peachin says:

    scalp long, swing short – Technicals

  64. sditulli says:

    I am extremely bullish right now. I cut down some longs into the summer sell-off, but have been rebuilding longs on the way up as well as putting up new money into the rally. I’m targeting roughly 1500 in the S and P at which point I think P/E will be too high to be aggressively long.

    Reasons to be bullish:
    1) Fed will be aggressive into any weakness – Call this the Scott Sumner call, but I believe his NGDP targeting is catching on and the FED has realized that ’09 was so bad because they were behind the curve. They will be super aggressive on weakness, aggressive on a steady recovery, and still dovish if we keep popping out 250k jobs/month

    2) markets not expensve at current pricing. Its also not cheap, but it is the cheapest safest asset available (bonds way too expensive for investors…no return in those things, but little risks too)

    3) Europe is a mess. Their political system doesn’t work, but the ECB seems to be playing ball enough to keep them from blowing up for now. Just a 6 month call on them, but they are not going to be ugly enough to cause a probably for a little while

    4) I don’t care about budget deficits. We paid off our WWII debt with interest rate caps and will do the same today. Don’t let politics get in the way of making money.


    1) Earnings growth seems to be slowing. Its why you sell the big rallies when valuations get stretch and wait for macro concerns to get valuations down.

  65. Old Rob says:

    Regarding BR’s great article. Maybe stocks are being viewed as a commodity like a bag of sugar or a box of good cigars. We’re all shopping for a lower price now.

  66. Jaye says:

    It’s who is bearish that bothers me

    Gundlach ECRI Dalio

    My common sense tells me it’s a double digit year for equities.
    Election year and I suspect that the public sector which was driving most of the layoffs a year ago will no doubt not be letting anyone go this year.

    Obama study’s history and he knows it’s not the unemployment rate but it’s direction that matters for reelection ( Roosevelt , Reagan ).

  67. rob says:

    The most daming evidence I can find to support my bias of being a bear, is a quick look at CNBC’s front page. “Cramer” currently has four different titles with the bent of “time to invest.” If that hack can get that many spots, then it is usually indicative of a fall. (only being half smart assed)

  68. nofoulsontheplayground says:

    I’d be interested in seeing some of the bull/bear sentiment numbers and other anecdotes from the 1974-1982 time frame. Stocks were completely and utterly hated in summer 1982, but I have not seen much to describe sentiment in the 8-years prior to that. I believe it’s important to understand that time period as it may be informing the present.

    On the other hand, 401K’s and self-directed investments were almost unheard of in the late 1970′s and early 1980′s, so it may not be a fair comparison as far as man on the street sentiment is concerned.

  69. park city skier says:

    BR: Note that when I flipped Bullish in March 2009, the comments here were insanely bearish in response. They are bearish again, but not nearly as much

    The average american perspective should be bearish from their perspective they are living through the great depression 2.0. Barry, the eye balls that you attract are for the most part the investing class. Ask the middle market and smaller business owners how profitable their operations are and you may find things are not so good. I know my net income is slim from my operations compared to pre 2008 even though revenue is rising. Most of my peers who own businesses c/o of less revenue, shrinking margins and they have already cut the fat off and are left with only pure muscle. In the past you have posted charts: of market cap to GDP. we are no where near a historic bottom in this metric, either we will have revision to mean or this time during the second worst downturn in american history things will be different. Time will tell.

  70. S J Morton says:

    I’m bearish, definitely. And I’m happy to see the bears are getting fewer between, I agree with your technician friend. Everything has its price, I would be less bearish at 1200 but at 1340, no problem.

    The recent data out of China is a case in point. M1 is tanking, while inflation is rising. The authorities are in a box, I don’t see the room for another stimulus package. Europe? Forget it. Yes our data has been better than expected for some time (a sort of ‘wall of worry’ indicator), but recently it has begun to disappoint. Lots of good news is priced in.

  71. Sunny129 says:

    With ECB with LTRO program+ Ben’s promise of ZRP till mid 2014 and a perpetual push for RISK-ON trades from all CBers, one needs to be really brave to be ‘confirmed’ Bear!

    The housing bubble and the stratospheric valuation of FIRE industry stocks were based on M to M accounting, but this was COVENIENTLY suspended in March 2009. Does any one know the long term effect of this decision?

    Ever since the market has recovered 90%, Fed has 2-3trillions of MSB assets of ?value. There has been persistent mis-pricing of risk and active suppression of true price discovery, mis-allocation of capital to Consumption Economy and NOT the productive Economy!

    Market appears to be ‘house of cards’ on thin ice but the power of perception over reality is overwhelming and shocking! I have been in the market since 1982. Just UNREAL, but should I keep dancing just b/c the music is played? I think NOT. Good luck to those in this dancing game!

  72. [...] week, Barry Ritholz spoke with one technician who said that she didn’t know anyone who is bearish and even [...]

  73. park city skier says:

    “The thing always happens that you really believe in; and the belief in a thing makes it happen.” ~Frank Lloyd Wright~It’s our perception of reality that is important, and if we have a large enough group of people believing in the same reality it becomes real until it doesn’t. Cults and governments have been using the power of perception forever.

    Is Barrons cover story the tell of the thing to come??

  74. 873450 says:

    “Where are the bears?”

    It’s an election year and GOP hasn’t settled on a candidate.

    Loyal bears stand ready to dance and perform, but they need a choreographer.

    Bring on more clowns.

  75. AlexM says:

    This is the third year since the market bottom in 09. There are pockets of enormous technical strength lead by the NDX, and I believe that the others will follow. Sure, we will have down drafts until the ultimate long term top forms but we are not there yet. Yes, we are overbought, but many times over bought begets even more overbought.

    I find it interesting that so many keep trying to link their bearish views of the economy, domestic and international, to stock market performance. They are related and affected but the underlying technicals tell the true story of accumulation and distribution, not government reports, media hysteria, or pundit mumbles.

    The market can and will go up despite the worst fundamentals, and even worse investor sentiment. (see 1982, 2001, 2009) Trying to tie cause and effect together in the stock market is a fool’s errand.

  76. dancingdiva says:

    Sure – everyone wants to buy the market lower. But the key question is if anyone wants to sell the market lower. Without longs liquidating, the market will stay elevated.

  77. [...] week, I asked the question “Where Are the Bears?.” I was quoting technician Helene Meisler, who had pointed out that many of the more well known [...]