About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Thursday, April 15, 2010

Technical, Sentiment, Psychology Summary

I thought I had it nailed when the SP 500 dropped sharply over
latter Jan. into early Feb. '10. That break came on time and so did
the rally, but the rally, contrary to historical market behavoir,
developed into a much stronger one than expected coming after
a classic three upleg run from the 3/09 low. I figured we would
see a rally of substance after a good several months had transpired.
I made some money in it, but to compound my frustration, we
are now seeing the upmove extend despite the fact that plenty of
capable analysts / traders have known it was overbought for
at least a couple of weeks. Well, I'll stay with my trading discipline,
but this has been a frustrating several weeks.

This morning at 9:33 am on CNBC, floor commentator Bob Pisani
says, "Folks, there's a wall of money coming into the market...That's
what traders are telling me." So we know sentiment is bullish and
is at extreme levels on a couple of measures. And we also know
that the trading/research/strategy side of The Street has its
swagger back, and that there are a raft of money managers on TV
to tell us the market is cheap on 2011 eps estimates. You know,
guys who were hiding under their desks a year ago.

My ex-post reading on psychology is that with the downward break
in the market into early Feb. there had to be a large number of
money managers who saw a chance to jump on board after the
Greek debt crisis subsided and the economic indicators improved.
These were the guys who were low on equities exposure.

So, all told, this cyclical bull went into fast forward mode timewise,
and even if stocks get dumped for a week or two straight ahead
(it's overdue), I plan to hunker down and trend follow for a good
several weeks before I try to be the first kid on the block to make a
fresh call on direction.

6 comments:

Rich said...

Most of the comments I hear are neutral to negative. I only know one very bullish investor.
The link below comes out on Monday morning, and is a decent contra-indicator on extreme readings.-

http://tickersense.typepad.com/ticker_sense/2010/04/april-12th-blogger-sentiment-poll.html

And if you want a daily dose of pessimism, feel free to subscribe to David Rosenberg's emails, at -

http://www.gluskinsheff.com/

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