One of the predictable Behavioral flaws in investing, described in an excellent presentation at the TSAA this month by Richard Lehman of U.C. Berkeley's Finance Dept., was the "getting even" trait of investors - even going back to old highs five years ago. This is resulting in the difficulty of getting through the 14,000 DJIA mark convincingly, which is illustrated in Technical Analysis by logical Support and (in this case) Resistance. There is a tendency to avoid a loss - selling winners too soon, and waiting too long for bad stocks to rebound. Contrary opinion involves doing the "Wrong" thing at the wrong time - the opposite of which we have learned all our lives; e.g., buying "bargains" in a store - shying away from stocks that have finally reached oversold values.
In my Sentiment blog: www.mktsentiment.blogspot.com, I list some of the Contrary Indicators each week (many are reported in that time frame). As noted in previous blogs, Caution is now being warned by several of my Sentiment Indicators: High readings by the NASD to NYSE Volume ratio (bullish complacency); lower VIX - in the low teens; Bullish percent still in the '80s; and the newsletter surveys Bulls over Bears.
One of the longer term stats - Insider Selling by CEOs and Key employees- is flashing danger the past few weeks. It has been as high as 130 to 1 over Buying this year - at 58:1 last week. Dollars are flying out of Money Market Funds, but not necessarily into stock funds. Other anecdotal figures are appearing in the media, such as - when the national price of gas breaks $3.75 (as it just did) there is a selloff of some import.
Hedge funds, which have performed miserably for their 2% fee plus, are now as highly invested in stocks as in Oct.'07! 87% of the S&P 500 stocks are above their 200 day moving average - does this mean overbought or an incredibly strong market? We shall know in the fullness of time. Finally, from Paul MacRae Montgomery - he of the contrary magazine cover signal- says high sunspot activity correlates with good stock markets (animal spirits) - they should peak anywhere from May to September - sing along.