Today I have a sell signal that I find to be persuasive:
As a whole, the four sentiment indicators reported in Barrons are now
more bullish than they were at their peaks, just before the last two
corrections:
II consensus AAII weathervane average
6/3/96 48% 64% 61% 54% 56.75%
3/3/97 48% 74% 63% 62% 61.75%
today 48% 67% 59% 80% 63.5%
(II = Investor's Intelligence, percentages shown are bullish)
Based on this, and the historical results for AAII data since 1987,
I'm now expecting a correction to develop certainly within 3 months,
and most likely within 3 weeks.
Over the last two days, I've moved almost all my tax-sheltered equity
exposure into cash, and I've added a lot of short sales to my taxable
account, in addition to selling a few stocks that didn't have much
taxable gain yet.
In addition to the investor sentiment, which offers a precision of a
couple of weeks in the sell indication, there are also the market valuation
indicators, which don't have such a narrow time scope, but do have a
significant fundamental grounding. In particular, the p/e of the
S&P 500 is presently over 20, a condition that historically has never
lasted long. |
