"Bulls Wait Anxiously on the Sidelines"
By Rev Shark
RealMoney.com Contributor
6/5/2007 7:45 AM EDT
Hope is the thing with feathers. That perches in the soul. And sings the tunes without the words. And never stops -- at all.
-- Emily Dickinson
"It isn't much of a surprise when bears hope for the market to pull back. They have their arguments for why we shouldn't continue to go higher and, like most people, want to be proved correct. That is nothing new.
What has been unique about the current market rally is the number of bulls who have been hoping for a pullback. It isn't that they are all that negative about things. They just refuse to chase a market that goes straight up and doesn't rest.
The inability to find good entry points has created an atmosphere of hostility toward this market rise. Sentiment has remained surprisingly sedate despite the indices continually hitting new highs, and it's probably more a function of frustration over the inability to put cash to work rather than a high level of pessimism.
Certainly there are many who struggle to reconcile a struggling real estate market, rising interest rates, slow first-quarter GDP, rising gas prices and other economic hurdles with a market that is acting like we are in some sort of giant economic boom. That has kept sentiment contained, but what is probably the bigger source of frustration is that the market has not offered easy entry for those who want to stick a toe in. The pullbacks are so short that few have a chance to deploy capital.
Consequentially, the bulls are constantly hoping for some basing or minor pullbacks so they can put some capital to work. Of course, when many are hoping for the same thing the market will typically frustrate them and do the opposite. Hence we continue to go up and up with just the briefest of pullbacks.
Some of the folks on the sidelines relent and do some buying, which keeps things perking along, but the undercurrent of unhappiness with a market that never goes down remains extremely strong.
I suspect that at some point we'll see a pullback that allows the folks on the sidelines to put cash to work, and then we will see bullish sentiment rise. Once that happens, we will be in much greater danger of a sustained pullback. For now, those unhappy bulls who are wishing and hoping for a chance to put cash to work are likely to keep our pullbacks fairly mild.
We have a slightly weak open on the way. Overseas markets were mixed and China stocks in Shanghai were just downright crazy with a huge intraday swing from down 7% at the open to up more than 2% at the close. Oil is down a bit after a jump yesterday, and gold is trading up slightly."
(in
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Enviado: 5/6/2007 12:44