CONTRARIAN SIGN? PORTFOLIO MANAGERS ARE GETTING VERY BULLISH
The sentiment signals are starting to stack up against the bulls. Last week Mark Hulbert at MarketWatch reported that Advisory bullishness was “dangerously high”. He reports that bullishness hasn’t been this high since before the 2007 market highs:
“Based on the several hundred investment advisers I track, I’d have to say that bullish sentiment is approaching dangerously high levels. Consider the Hulbert Stock Newsletter Sentiment Index (HSNSI), which represents the average recommended stock market exposure among a subset of short term stock market timers tracked by the Hulbert Financial Digest.
It currently stands at 62.8%, up from 13.8% just one month ago. That’s an awfully big jump for so short a period of time, especially considering that the Dow Jones Industrial Average rose a modest 4.4% over this period.
Also worrying is that, with but one exception, the HSNSI is now at its highest level since early 2007, more than three years ago.”
That one exception came in early January just before the market rolled over 9%.
In addition, David Rosenberg noted just yesterday, that portfolio managers are now sitting on near-record low cash levels:
“as charts below from the ICI illustrates, portfolio managers have been so nervous to miss any up-moves that they have run down
their cash holdings to 3.6% of assets from nearly 6% a year ago — the largest decline in 19 years. Equity cash ratios are back to where they were in September 2007, just as the stock market was hitting its peak.”
This new found bullishness by portfolio managers and advisors could be seen as a contrarian sign of things to come.
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If Hulberts indicators worked, he would set up a fund and coin money. Instead he sells his advice for a few dollars. Remember you get what you pay for.
Like everything in life …. nothing is perfect but what he states here with HSNSI is a valid sentiment, you do not have to like it but trade it properly.
Just shows how physotic this market is, there is no conviction either way , we swing from bullish to bearish in a matter of days purely on technicals because fundamentals were left a long way back several months ago and they haven’t caught up, so technicals is all we have.
Fundamentals will not catch up – in fact, they have been going in the opposite direction for over a year. Whatever cannot go on forever must end. Both fundamentals, techinicals, and mere independent thought suggest the end is very near. This is a classic topping market, and like any topping market, it will top when the fewest number of people expect it.
It helps to remember that Mr. Market prefers to make as many people as possible part with their money.
Agree, it doesn’t look like fundamentals are going to catch up. The purpose of the various liquidity programs and bailouts was to buy time to let the fundamentals recover. But there are structural problems preventing that and so the stimulus and bailout and liquidity money are about to stop and fundamentals are still not there to support the market. However, whether it will become priced into the market next month or 3 months from now or next week, we don’t know.Until then all we can do is rely on technicals.
yep aha. and DOW 20000. this feels like the first two weeks of january. four more piigs to go. got boat short S&P’s again today after getting mini-bullish last month around 1050. this made no sense until this afternoon when the true colors came up.