Thursday, April 30, 2015

We Are All Bulls Now (excerpt)

Everyone is bullish. Contrarians know that must be bearish. However, everyone has been bullish for a while, yet the S&P 500 rose to a record high of 2117 on April 24. That’s because everyone has finally figured out that fighting the Fed in particular and central banks in general is dumb. So we are all smart now. As a result, bullish sentiment is at a record high, though the bull market, which is more than six years old, is no spring chicken.

I calculated the 52-week moving average of the Investor Intelligence Bull/Bear Ratio. At 3.46 this week, it is the highest in the history of this series, which starts in 1987. The 52-week average of the sum of those who are bullish or expect a correction rose to 84.4%, also a record high. The percentage of bears fell to only 13.9% this week, with the 52-week average down to a record low 15.5%.

If we are all bullish, who is left to buy stocks? A 4/12 FT article reported: “Shareholders in the biggest US companies stand to receive a record $1tn in cash this year, as blue chips’ concerns over the global economic outlook have diverted cash away from investment and is driving a boom in buybacks and dividends.”

Today's Morning Briefing: Cold Cash. (1) Everyone is bullish, but that’s not bearish. (2) We are all smart bulls now. (3) No spring chicken. (4) Has-been Fed Model has been working since 2010. (5) Companies set to return $1tn to investors this year. (6) Fed’s easy money enables buybacks, spinoffs, and M&A. (7) Buybacks = Corporate QE. (8) Fed depending on undependable data. (9) Dollar looking peakish. (10) Money is exiting Greece in fear of Grexit. (11) More upbeat indicators out of Eurozone. (More for subscribers.)

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