Daily Investment Interpretations

April 18, 2009

2009-4-18 (Early):   One of the advisory services to which I subscribe describes yesterday's price rise as being an upside breakout. This service agrees with Michael Ashbaugh's analysis on Tuesday that over the intermediate term, the trend is still relentlessly higher. It's overbought and ripe for a pullback at any time, but the advisory service suggests that the overbought condition may be indicative of the strength of this trend rather than an indication that the market is apt to turn around. Investor sentiment is dangerously positive, but the market keeps rising, anyway. 
    My own interpretation is that most institutional investors are expecting a pullback and are waiting until then to commit the greater part of their money. And that suggests that the stock market will continue to rise even in the face of bad news until the professional investors give up and climb aboard this bus. Then the market will turn and correct after most of them no longer have much money to take advantage of a correction.  
    Meanwhile, numerous articles are appearing advising us to position ourselves for the global turnaround: Five ways to set up your portfolio for a global market recovery. It may be that investors have convinced themselves that the U. S. economy isn't going to collapse, that there are fabulous bargains out there for the patient investor, and that there won't be a better time than now to hunt for bargains. Even if the market takes years to recover, it looks like a better bet than other investment vehicles. 
    I'm speculating that one reason this market keeps rising is that there's a lot of money on the sidelines, and a lot of caution about re-investing it after the shellacking that investors have taken in this grizzly bear of a bear market. That means that there's still plenty of money left to fuel the market upward.