Mom and Pop and Sentiments
It is extremely rare to see bullish story on market from the perma bear mouth piece- Barron's. This week at least the cover story is making a valid point about sentiments. The mom and pop are skeptical of rally. Unlike the top in 2000 where bullish sites and bullish newsletters were rage, we have bearish sites and bearish bloggers dominating in popularity.After all most blog readers are mom and pop investors and they are showing their sentiments by flocking to purveyors of gloom and doom blogs in thousands. That is one of the best indicator of sentiments being bearish as the market has gone up. As long as that continues,rally has legs. Rally will have corrections but all dips are buying opportunity.
The reluctance of retail investors to buy stocks as the Dow hits new highs suggests that the rally has further to run. Just be ready to grab your coat once Mom and Pop show up at the party. That's a sure sign it's time to go.
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7 comments:
Pradeep,
Although a (minor) correction may be ahead, I don't see how we can really fall from where we are with the sentiment bearishness elevated as of Friday's declines. It may take 1-2 more weeks and new higher highs before an actual decline.
Joe
Even if we have 10-15 % correction at this stage, it is not out of character. That will be normal bull market correction. I am not saying that will necessarily happen.
Pradeep,
Does Telechart have backtesting capabilities?
Do you know if Amibroker does as well?
Thanks
I stop reading at the words "sure sign" and disregard everything up I read before those words. . .
stock doggy
Telechart does not have backtesting facility. However Blocks the add on to Telecharts from Worden Brothers has backtesting ability.
Amibroker has some level of backetesting capabilities.
The supposed little guy is looking for easy money. The last few years "easy money" was in flipping real estate using cheap loans. Unless the stock market suddenly offers up some easy money, the little guy won't return to trading. I don't see any catalyst at this point.
The catch on this sentiment issue is the foreign markets. People arent going to put their money in the US market as long as the dollar is falling and the global markets are doing better. As always, people are chasing performance and we do not have that here so its not surprising that money is not coming in. Considering the global nature of this economic expansion, i would be more worried about a serious correction in the foreign markets which would then leak into our market. I think the US market would hold up better but it would still go down.
Thats a scenario for a 10% correction despite some bearish sentiment.
But sentiment is really quite bullish i think, ever since that 280 pt day, something in the air has changed. A sense of invincibility on CNBC is very pervasive right now.
I agree ofcourse that a 10% correction would be great opportunity for buying.
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