Over the past couple of weeks I have been reading blogs, newspaper articles, market information sites, magazines, etc to get some sense of how market people view the sentiment picture in the stock market. I would summarize my findings by saying that the typical analysis goes like this: yes, people are turning bearish but they are not bearish enough to support a substantial rally, let alone a bull market.
This is a quite typical situation at market turns - there are always good reasons to think the low or the high still lies ahead of us. "Not yet, Not yet" is the common refrain.
My own view is that sentiment is about as dark as I have ever seen it. It is as bearish as it was near the 2002 bear market low. I've commented many times over the past six months on this condition.
Above this post you will find some more evidence for my assessment. The first piece is the latest cover from Business Week: Retirement Strategies for Tough Times. I love the phrase tough times. It evokes the usual description of the depths of the Great Depression, and of the recessions of 1974-75 and 1981-82. But as far as I can determine, we are not in even a mild recession and one is not likely to start this year.
The cover right above the Business Week cover is the Time Magazine cover of July 29, 2002. This was virtually the exact low of the 2000-2002 bear market. Note the similarity in sentiment - fears about retirement.
The two charts at the top of this post show the Investor's Intelligence poll of newsletter sentiment. With the latest reading of 47.30% bearish, this bearish percentage is higher than at any time during the past 14 years, including the 1998 panic low and the 2002 bear market low. Wow!
This market is going much, much higher.