The more the markets rally's the more bulls we have. The more the market drops the more bears we have. Its the way of the investing world and why the most money is always made when markets abruptly turn. I think we are close to a major market turn.
http://tradersutra.blogspot.com/2010/09/top-turn.html
There is a general lack of conviction in this market. The weekly Bull/Bear survey from the AAII is still surprising. According to the survey, bullish sentiment increased to 50.89% which is the second highest reading in two years. Just a few weeks ago when the Dow was below 10K and the SPX was hugging major support at 1040, the number of bulls was near 20%. They hated the market 7% ago yet they love it today. Its really amazing what market sentiment does to people's imagination.
On August 26th when the SPX was between 1040-1050, the number of bulls was near the March 9, 2009 low. This is why I loved the market at the moment. To much fear.
http://tradersutra.blogspot.com/2010/08/l-i-q-u-i-d-i-t-y.html
Today with the index above 1120, a full 7-8% higher, we have the most bulls in two years. not enough fear and too much greed. The number of bears has moved from 49% a few weeks ago to 24.3% today. This is huge!
Gold keeps moving higher as the dollar drops. The Euro, Yen, & Aussie Dollar are all moving higher pressuring the USD.
Back to gold for a moment. The SPX return for the year based on Gold is a negative 14%. That's all you need to know about FIAT currencies.
The Chinese Yuan is higher again vs the dollar. Yesterday, the US filed with the WTO against China and their vast currency manipulation scheme. This sows the seeds for a trade war with China. Another word of caution, the 1987 Crash followed Secretary Backer starting a trade war with Japan. I am just saying.
India raised interest rates again. So we have the two biggest emerging market economies in tightening mode. i am just saying.
Did I mention the European Sovereign Debt Crisis?
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