Posted At : October 19, 2009 10:25 AM
Market Update – Dow 10,000…again…Let’s party like its 1999!
Just minutes ago the Dow crossed 10,000 for the first time….since March 1999. It’s nice to have the “lost decade” thrown right in your face. Buy-and-hold investors have gone nowhere fast, and have lost about 5% when you factor in for inflation (still think buy-and-hold works???) Basically, there is only one side of the market and it is not the bull side or the bear side, but the right side! Right now the right side has been to be bullish. The market bounced off of support last week which was a positive sign. Volume has been less than normal, which is a negative but looks to be picking up. I want to see higher prices accompanied with increasing volume.
The lack of volume on the current rally is not the only cause for concern. Increased Investor complacency still alarms me and will be the deathknell of this rally. The strong price gains in the major indexes evidently rejuvenated bullishness, especially among traders. For instance, the CBOE equity put/call ratio has returned to a series of overbought readings during the past few days. This week’s report on the level of bullishness of futures traders in the Bullish Consensus poll was somewhat of an eye-opener with a reading at 72% bulls. The last time a reading over 70% was recorded was in Oct ’07, which was clearly not the best time to be bullish. However, individual investor sentiment is still muted, showing that haven’t gotten into this market yet. What usually happens is the institutional traders get in first, then the institutional investors then the individuals. That is usually the end as the traders sell to the unsuspecting individuals. Yet, it can take weeks or months.
Regards – Keith Springer
Radio Host of Smart Money with Keith Springer