“Welcome to the new, one-hour, Family Feud Challenge! What’s the top answer to this question: What’s Found in nearly ever refrigerator? The survey says, the number 3 answer is Eggs. The number 2 answer is Butter. What is the number 1 Bullseye answer? You’ll get the answer as we play The Family Feud Challenge!”
Based on my own conversations and impressions over the last week, here’s how people are positioned and viewing the stock markets here:
- If you asked 100 “professional traders” (whatever that means) if they own enough stocks, they’d probably laugh and say they aren’t actually short enough.
- If you asked 100 “professional traders” if they are bullish, they’d probably say hell no, they’re bearish.
- If you asked 100 hedge fund managers if they own enough stocks, they’d probably say no.
- Ironically, if you asked 100 hedge fund managers if they are bullish, they’d probably say no.
- If you asked 100 long-term retail investors (who have real jobs away from the stock market) if they own enough stocks, they’d probably say yes.
- If you asked 100 long-term retail investors (who have real jobs away from the stock market) if they are bullish, they’d probably say not really because the markets are so extended but they’re bullish about the long-term.
What does this say about the markets? Well, I usually look for a big turn in the markets when sentiment is extremely lopsided one way or the other. When even the hedge funds and the permabears are playing stocks for gains on momentum longs (as was the case back in October last year when I did turn so bearish and aggressively bought puts), that’s often an indicator that the markets are about to turn down.
And when markets crash and everybody, even the long-term retail investor, gets bearish and starts puking stocks (as was the case back in late December over Christmas week), that’s often an indicator that the markets are about to spike higher.
Meantime, markets can just follow a trend. Or they can just gyrate in a rangebound manner. What’s the most likely market outlook for March then, based on this analysis, at least?
As I mentioned to someone in the Trading With Cody Chat Room this morning:
Q. Are you looking for a pullback still in March ?
A. Eh, not feeling like I’ve got a feel for the market’s moves in March, but feet to fire, I’d guess it’s another month of mostly rallies over sell-offs.
Q. Trim anything after recent earnings?
A. Not trimming much in the personal portfolio or in the hedge fund. In the hedge fund, I got more cash in, so that’s equivalent to trimming some and raising cash.
Speaking of the Chat Room, we’ll do a Live Q&A Chat on Tuesday next week at our usual 9am ET time. I just didn’t get around to getting this week’s formal chat done.
PS. After we got home last week after spending 60 days 180 miles from our house at the UNM Hospital (5300′ elevation), we’ve had to move Amaris to my in-laws house 30 minutes away to get her to a lower elevation (also at about 5300′ elevation). Of course we wish were at our own house (7600′ elevation) but we aren’t rushing it as she is doing pretty great overall now and we are incredibly grateful for that.