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Investors and Advisors Are So Very Confident and Bullish

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    September 15, 2014

    As I noted in Saturday’s blog, Barron’s reported that not even one of the market strategists it surveys each September expects the market to go down. 100% are bullish.

    The Investors Intelligence Sentiment survey of investment letters, shows the smallest number of bears in 27 years. That’s lower than in 1999, 2007, lower than just before the S&P 500’s 19% plunge in 2011. Why, at just 13.3%, it’s the lowest since 1987, before the 1987 crash.


    There’s nothing to be concerned about though.

    You can know that from the emotional reactions in ‘Comment’ sections of websites, to anyone silly enough to suggest the high level of investor bullishness is a warning sign. “Idiots that are worried about anything as arcane as investor sentiment must be blind as well as dumb. Investors, newsletter writers, and advisors have been at extreme low levels of bearishness and concern since early last year, and the market just keeps going higher.”

    They are so right.

    That shows up not just in the Investors Intelligence chart, but in this chart of the VIX Index (aka the Fear Index). It measures the sentiment of options players.

    It has been at its lowest level of fear (highest level of bullishness and confidence) since the 2007 market top for the last 19 months. And the market just keeps going higher.


    The sales pitch for Alibaba shares has begun.

    After amending its initial prospectus, China’s giant Alibaba Group is proceeding toward the launch of what will be the biggest stock market IPO in U.S. history in a couple of weeks.

    At present the company expects to price the IPO at $60 to $66 a share. That would set the company’s initial value at $163 billion.

    However, as with any IPO, the starting price is not based on value, but on how much its investment banks believe they can get investors to pay. That will be decided by how much excitement the company can create in its next step, a global roadshow to promote the stock to investors.

    Analysts expect that if it can drum up enough investor enthusiasm with its multi-city marketing effort, it will price the shares above the initial range, and try for a valuation of more than $200 billion. That would rank it immediately in the 20 largest capitalization companies traded in the U.S.

    The road show seems to be off to a great start. Reuters reported yesterday that hundreds of hedge funds, mutual funds, and other institutional investors lined up for the initial presentation at the Waldorf Astoria hotel in NY, and the line “snaked all the way down to the basement.”

    The other excitement of the day is the launch of yet another iPhone update, the iPhone 6.

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    To read my weekend newspaper column click here:  Why a Market Correction Now Would be the Best Scenario

    Images: Flickr (licence attribution)

    About The Author – Sy Harding, Street Smart Report

    Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!

    It includes our research and analysis on the economy and markets, and provides charts and buy and sell signals on the major market indexes, sectors, bonds, gold, individual stocks and etf’s, including short-sales and ‘inverse’ etf’s.

    It provides two model portfolios as guides. One is based on ourSeasonal Timing Strategy, one on our Market-Timing Strategy.

    In depth updates are provided every Wednesday, with interim ‘hotline’ updates every time we make a trade. An 8-page traditional newsletter Street Smart Report is provided on the website every 3 weeks, in pdf format for viewing or printing out.

    There is the Street Smart School of online technical analysis ‘seminars’,commentaries to keep you ‘street smart’ about Wall Street, and much more. 


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