Is DOW 11,000 A Bull Trap?"
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http://www.marketwatch.com/story/contrarian-analysis-of-dow-11000-2010-04-06?reflink=MW_news_stmp
April 6, 2010, 12:01 a.m. EDT
A tired market
Commentary: Contrarians worry that there's too much complacency out there
By Mark Hulbert, MarketWatch
ANNANDALE, Va. (MarketWatch) -- With the Dow just two-tenths of a percentage point shy of the 11,000 level, even aggressively bearish advisers would be foolish to confidently predict that the market won't surpass that level in coming sessions.
Nevertheless, the fact remains that the sentiment winds are not blowing in the market's sails right now. If the Dow is to rise decisively above the 11,000 level, therefore, the impetus will have to be something else besides prevailing sentiment.
Consider the average recommended exposure to the stock market among short-term market timers -- as measured by the Hulbert Stock Newsletter Sentiment Index (HSNSI). It currently stands at 56%.
About the only good news inherent in that number is that it's lower than the 65% level to which this sentiment index rose in early January, right before the January-February correction set in.
But from almost any other perspective, the HSNSI's current level is worrisome. For example, but for that period of even greater bullishness in early January, the current level is as high as the HSNSI has been since May 2007.
....
The picture painted by the CBOE's Volatility Index (INDEX:VIX) is potentially even more worrisome: It now stands below its closing low in early January. In fact, the VIX is currently very close to where it stood at the stock market top in October 2007.
The bottom line from a contrarian point of view: The stock market's difficulties in breaking through the 11,000 barrier are not surprising. The market's apparent fatigue is consistent with too much complacency, if not outright bullishness.
Contrarians therefore are waiting for more than a few advisers to turn bearish. That most likely means that the stock market needs to pull back a bit.
If, in such a health-restoring correction, advisers quickly turn more bearish, then contrarians will then become more confident that the Dow will more convincingly make an attempt at breaking through the 11,000 level.
April 6, 2010, 12:01 a.m. EDT
A tired market
Commentary: Contrarians worry that there's too much complacency out there
By Mark Hulbert, MarketWatch
ANNANDALE, Va. (MarketWatch) -- With the Dow just two-tenths of a percentage point shy of the 11,000 level, even aggressively bearish advisers would be foolish to confidently predict that the market won't surpass that level in coming sessions.
Nevertheless, the fact remains that the sentiment winds are not blowing in the market's sails right now. If the Dow is to rise decisively above the 11,000 level, therefore, the impetus will have to be something else besides prevailing sentiment.
Consider the average recommended exposure to the stock market among short-term market timers -- as measured by the Hulbert Stock Newsletter Sentiment Index (HSNSI). It currently stands at 56%.
About the only good news inherent in that number is that it's lower than the 65% level to which this sentiment index rose in early January, right before the January-February correction set in.
But from almost any other perspective, the HSNSI's current level is worrisome. For example, but for that period of even greater bullishness in early January, the current level is as high as the HSNSI has been since May 2007.
....
The picture painted by the CBOE's Volatility Index (INDEX:VIX) is potentially even more worrisome: It now stands below its closing low in early January. In fact, the VIX is currently very close to where it stood at the stock market top in October 2007.
The bottom line from a contrarian point of view: The stock market's difficulties in breaking through the 11,000 barrier are not surprising. The market's apparent fatigue is consistent with too much complacency, if not outright bullishness.
Contrarians therefore are waiting for more than a few advisers to turn bearish. That most likely means that the stock market needs to pull back a bit.
If, in such a health-restoring correction, advisers quickly turn more bearish, then contrarians will then become more confident that the Dow will more convincingly make an attempt at breaking through the 11,000 level.
The market is going to take a 10% dive. If not tomorrow, then someday soon, and for a good long while.
Here's what I see for ES (E-mini S&P 500) happening next.
Shorts in at 93-90. Will see a correction, possibly 72s even 66s. After that shorts will liquidate at their position at lower prices and we will hit 1200. At this point will be watching to see if huge short inventory is built up at 1200. I'm short til I see liquidation of these shorts that are holding 93-90. Have fun.
Shorts in at 93-90. Will see a correction, possibly 72s even 66s. After that shorts will liquidate at their position at lower prices and we will hit 1200. At this point will be watching to see if huge short inventory is built up at 1200. I'm short til I see liquidation of these shorts that are holding 93-90. Have fun.
I hope you fools are right, as I'm short as all get out.
That said, i think it will run higher. IN spite of all logic.
The primary reason is I believe this is all a game to suck in retail investors, and they just aren't back in yet.
When they are, she'll roll over and drop 30%, and thats the real deal.
That said, i think it will run higher. IN spite of all logic.
The primary reason is I believe this is all a game to suck in retail investors, and they just aren't back in yet.
When they are, she'll roll over and drop 30%, and thats the real deal.
tops only show up in hindsight unfortunately, but its a fair point nonetheless...