One day removed from the Dectaper the market held up relatively well digesting Wednesday’s solid move. It would have been ideal for the market to follow through with big gains today. However, we’ll take a low volume pull back as well. Leading stocks fared pretty well and performed in line with the S&P 500. Economic data continues to be mixed with existing home sales and manufacturing data being weaker than expected. All in all given the fact we are seeing the Federal Reserve actually tapering its bond purchases the market is holding up pretty well. Now, the question will be if this market can build upon the nice work put in by the market on Wednesday.
We continue to see stories regarding the market being compared to specific times in the past. Patterns do re-emerge and is part of our investing process. However, without a true sample size to test upon using one time period to compare to another is statistically meaningless. It does do one thing and it does create discussion and fascination with the crowd. So many are intrigued by the idea of calling a market top and bottoms for that matter they miss the real point. The point here is to get on a trend and ride for as long as you can. Most of the time this means sitting through volatility. In the end, price matters and following the process is how you execute.
Sentiment continues to run in the favor of the bulls. II bears remain sub 15% while the % of bullishness on the NAAIM survey is in the 90s. AAII bulls jumped more than 6 points to 47.5%. While bears nudged up a tenth of a percentage ending at 25.1%. Many of those who were neutral sided with other bulls and given what happened Wednesday the dominance of bulls should continue. We have seen extreme bullishness for well over a year now with very few times bears have won. While many contrarians would love to point out this would be a market top we tend to disagree. Bull markets will last much longer than anyone can anticipate. What remains true is those unable to cut losses will ride their horses till they are worthless.
Have a great weekend. Don’t forget to take advantage of our big 40% off sale. Use the coupon code: YEAREND. Remember, cut your losers and rise those winners.
