MANY investment newsletters have been fretting about the stock market — and that suggests that the market will rise.
At least that’s the conclusion you would reach if you followed the market-timing theory that is known as contrarian analysis.
Let the bears double down during this correction.
Other than concluding that the market is likely to rise, contrarian analysis does not try to forecast the size of the rally, or how long it might last. But the analysis does focus attention on what is likely to signal the eventual end of a rally: a sharp rise in optimism and, even more tellingly, bullishness that is stubbornly held even as the market starts to decline.
Neither of these early warning signals prevails today. So, for now at least, contrarian analysis concludes that the path of least resistance for stocks is upward.