Currently everyone from Warren Buffett to technician Ralph Acampora is touting stocks, as every signal seems to indicate a green light for U.S. stocks - a Contrarian's delight. With the Fed-us ex Machina supporting low interest rates and "bullying" up stocks, both pension funds and banks are still underinvested in stocks from their 15-year average. Averages, historical anecdotal information, are fun to observe, but usually only predict what path the future market will NOT take!
Streaking Alpha: Once again the previous Friday was up for the market, and today (Monday) looks to keep its 2013 streak alive by being down, half way through the day. At some point this streak, and the cyclical Bull market, which is past its historical "average" in time and distance, will end with a bang. Anyone watching Sixty Minutes last night must have been impressed with the severity of their Real Estate problem of government subsidy and overbuilding - millions of unoccupied condos and apartments. Just another BRIC in the Wall of Worry.
Last week's Sentiment Indicators that I follow in: www.mktsentiment.blogspot.com
were off their extremes, but getting a bit jumpy. Volatility has picked up, with a severe down day (more than retraced upwards), the VIX jumped to 19, then backed off. Massive (legal) Insider Selling has mediated a bit, while outflows from MMFunds reversed mightily to inflows of nearly $6B last week. A mere $1B went into domestic equity funds the week before ( 1 week lag).
For the third week in a row, large traders on the S&P 500 Futures (Commitment of Traders) are besting small traders in buying - something that has not happened in months. Bulls in the AAII (individual investors) camp declined sharply, and put option buyers on the Chicago exchange also jumped up- both events positive for the markets. It will be interesting to see how the neural networks react to reaching all-time highs on the DJIA.
Global markets closed mixed today, but a recent chart of global prices vs. RSI (Relative Strength Index) showed an unhealthy divergence - meanwhile breadth, measured by Advance/Declines and new highs/low has also weakened lately. Please see previous column for a Webinar on RSI.