- Interesting analysis. SP-500 is now where I said (back in 2010) I’d start being very careful. But it does NOT seem as though euphoria is here yet.
We keep hearing about how bullish everyone is. Sure, sentiment polls show bulls up near past peaks and we finally are starting to see some inflows to equity mutual funds. Yet, I’m not so sure we are seeing the over-the-top stuff that means a major top is near.
Here’s a great chart that shows analysts are actually growing more bearish as the SPX surges to new multi-year highs. Since last summer, the % of buys from the analysts has steadily dropped in the face of higher prices. One would think analysts would be getting more bullish here, but the exact opposite is happening. I find this combo to be rather bullish.
Again, remember that markets peak at ‘euphoria’ and I just don’t see it. How many times a day do I hear we are only going up because Bernanke is throwing money at the stock market? The answer is a lot. To me, that isn’t a sign people are truly in love with stocks here.
Back in October, I mentioned this chart, along with 10 other reasons, to continue to side with the bulls here. Sure we could have a 5% pullback at anytime, but the bigger-term backdrop is still very bullish here.