Its just tough to predict anything at this point....I am primarily long still but did hedge Q's, SPX, & IWM for some protection...
I haven't heard it mentioned much here, but The Great Wall of Short Street does not want to see this mrket make any new highs it seems...
Its really quite amazing how the sentiment of the bears (which oddly enough matches a few traders here) has been so high over the past qtrs...
AAII 50 wk moving avg for percentage of bears sentiment at 37.6% - That is a level only seen during two periods since tracking began in the early 80's. (Oct90-Jul91, Mar-May03)...we are actually about to pass the peak in bearish sentiment during the 2000-03 mkt meltdown...CRAZY considering the fact that the S&P is up roughly 16% in the past nine mos...
http://www.aaii.com/ (Need a pd membership for this)
http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=9&dy=0&id=p70956979582
...and 90+% since the bear mkt lows of 02
http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=5&mn=0&dy=0&id=p52130429475
...plus the cumulative a/d recently hit a new record high and we had one of the best aug/sep/oct runs in history...
http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=10&mn=0&dy=0&id=p79743750469&a=10 2145701&listNum=11
Is the S & P overvalued?....P/E 17.23 Forward P/E being 15.5 - doesn't seem so to me.
Permabears seem to be out in full force these days...QID receiving record volumes and with the explosion of hedge funds (some...many?) w/ trading strategies that directly benefit from sluggish or declining stock market equities, I sense it will be very difficult for the market to overcome this and break out w/ new highs. That is of course with the sub and inflation concerns aside...of which the messages seem to remain mixed.
Nevertheless, I get the feeling that many investors believe that a meaningful "correction" has not yet been accomplished....and there are still other indicators of current high levels of investor anxiety - ISE Sentiment Index
http://www.iseoptions.com/marketplac...ee_history.asp
btw - interesting on that chart to see that when sentiment dropped to the levels of current (like back in Aug 0f 06) the market began to go on a tear...
So, are the bears and short sellers that claim every pullback as a top while subsequently claiming every new high as just another shorting opp getting a tad bit complacent... or are they just plain bold... or are they just plain ........???
NYSE Short Interest surged last month 10% to new all time highs.
http://www.nysedata.com/nysedata/Inf...7/Default.aspx
Last night the Nasdaq also reported that short interest jumped to an all time record. From mid February through mid March, short interest on the Nasdaq rose 12.1% to 7,890,000,000 shares. This was the largest monthly percentage increase since Bloomberg began tracking short interest in 1991.
With the many investors sitting cash right now essentially on the sidelines...and with the huge short positions in the exchanges........will we continue to go down for much longer..??? Or would there be one helluva short cover if there was a catalyst to push us on up....there is certainly plenty of firepower waiting and watching....so COME ON inflation....Settle Your Azz Down, because Mr. B has just the catalyst to spark that fire if you do...a rate cut, and we're off to the races!!!
Unfortunately, I just don't see that happening for the next couple qtr's....of course this is just imho.