Commentary: Market may be in vicinity of April highs, but not mood
That was then, now is now
Mark Hulbert
Oct. 13, 2010, 12:01 a.m. EDT
Excerpt...
"Even though the market is only slightly lower today than late April, the mood currently is a lot more cautious, if not downright pessimistic. This is bullish, from a contrarian point of view, since it suggests that there is a robust wall of worry for the market to continue climbing.
Consider the average recommended equity exposure among a subset of short-term stock market timers tracked by the Hulbert Financial Digest (as measured by the Hulbert Stock Newsletter Sentiment Index, or HSNSI). It now stands at 25.9%.
To put the current HSNSI level in context, consider that it stood at 65.5% on April 26, the day of the market’s closing high prior to the May-June correction. In other words, the average stock market timer today is less than half as bullish as he was in late April.
Since the usual pattern is for advisers to become more bullish as the market rises, and more bearish as it declines, the current low level is quite surprising — and bullish.
Furthermore, the current HSNSI means that the typical short-term timer still has three-quarters of his stock portfolio in cash. That represents a lot of sideline cash that could propel the market higher, should these timers decide to once again turn bullish."
marketwatch.com
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