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Stock Market Unlikely to Leap Higher Just Yet

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We need to spend a few more sessions working off the overbought condition.

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"You're just a cockeyed optimist," was my caller's response. That's patently untrue, I wrote about the Dow Theory "sell signal" in September 1999, as well as the Dow Theory "buy signal" in June 2003. Then there was the Dow Theory "sell signal" in November 2007; and, I was very bullish in March of 2009. As my father used to tell me, "If you think the market is going up be bullish and if you think it's going down be bearish." Manifestly, I have been pretty bullish for more than three years with intermittent "cries" for caution along the way. As often stated, all you had to get right for the past three years has been to raise some cash in the spring and put it back to work sometime during the summer. That reoccurring strategy has worked because economic numbers began to soften every spring for the last three years. That brings on worries of another recession, which causes analysts to cut their earnings estimates followed by a decline in stock prices. When no recession shows up, they start raising their estimates and the stock market rallies. And, believe it or not, that's what is happening currently, as can be seen in the attendant Net Earnings Revisions chart from our friends at the Bespoke Organization below.


No positions in stocks mentioned.
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