Board-Ansicht
Mix-Ansicht- Skeptics are getting Bush-whacked - Amanito, 05.11.2004, 11:28
Skeptics are getting Bush-whacked
-->Skeptics are getting Bush-whacked
By Mark Hulbert, CBS.MarketWatch.com
Last Update: 12:01 AM ET Nov. 5, 2004
ANNANDALE, Va. (CBS.MW) -- It is said that the most bullish thing the market can do is go up.
And by this standard, the past two days have been very bullish indeed, with the Dow Jones Industrials Average ($INDU: news, chart, profile) tacking on nearly 300 points.
But I have an amendment to this old saw about the markets: An even more bullish thing would be for the market to go up in the face of widespread skepticism.
And by this revised standard, the market's recent rally leaves something to be desired.
Consider the latest readings from the Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average equity market exposure among a subset of short-term market timing newsletters. As of Thursday night, the HSNSI stood at 48.9 percent.
That is the highest level for the HSNSI since June 2003, some 17 months ago. Contrarians would be more confident in this rally's staying power if the HSNSI were not this high.
Another way of illustrating newsletters' relative bullishness is to compare the HSNSI today with where it stood on prior occasions when the Dow was at today's levels.
Consider Sept. 13, for example, nearly two months ago, when the Dow closed very near to the same level as where it closed on Thursday. Nevertheless, the HSNSI on that day stood at 27.9 percent, or about half as high as where it is now.
Similarly, the Dow on March 29 closed at very near today's levels. Yet, on that day, the HSNSI stood at just 1.4 percent -- or more than 47 percentage points lower than where it stands today.
So even though the market on balance has gone nowhere since March 29 and since Sept. 13, the average newsletter editor has nevertheless become much more bullish. From a contrarian point of view, that is a worrisome development.
Still not convinced?
Then consider this: The strongest rallies over the past couple of years have all started when the HSNSI was in negative territory -- when the average market timer was net short the market, in other words. This rally, in contrast, began with the average adviser already bullish.
That means there is less firepower left on the sidelines to propel this rally much further.
Could the market nevertheless continue to rally? Of course it could. Sentiment is not the only thing that makes the world go around.
Nevertheless, sentiment is a powerful factor. And the sentiment winds will not be at the market's back if it tries to rally much from current levels.
<ul> ~ http://cbs.marketwatch.com/news/story.asp?guid={558381A9-1E44-40A7-BC1B-00E55BB9</ul>
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