Friday Market Sentiment
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I reduced the number of analysts that I am following. I'm new to Richard Band, but you probably read Mark Hulbert's review of his newsletter at MarketWatch and he seems like someone to pay attention to. I basically agree with IBD, Tower, and Pring who are bullish over the coming weeks, but after that who knows.
With all the bad news, it seems like a risky time to get bullish on the market. But with prices barely above the long-term trendline and 50-month average, there is a stop out point close below which limits risk. Fortunately, prices never got excessive during this bull market the way they did prior to the 2001-2002 bear.
The individuals have been negative towards the market for months. Their timing has been excellent. Now they have turned bullish probably just at the right time. The bloggers have swung back and forth from the extremes not knowing when to buy or sell. The newsletter writers are a stable bunch. Their sentiment tends to move in small steps which provides us plenty of time analyze their survey results. Their sentiment is still extremely bearish but has started to move in the bullish direction. From a contrarian point of view, these survey results are favorable towards prices.
Here is a quote from Jim Mikka’s at The Sudbury Bull and Bear Report, "...one should note that, while a plurality of bears over bulls is a favorable omen, officially there is no buy signal until the bulls begin to grow at the expense of the bears.” I never read this before but I think this has started to happen.
These charts show the bulls increasing and the bears decreasing. According to Jim Mikka, this is a buy signal, if I interpret his notes correctly. This is an excellent level of sentiment for a sustained rally to develop.
Corporate insiders continue to be buying stocks in their own companies at a pace that is extremely bullish for higher prices ahead.
