Sentiment will not be as reliable as it was for the last 3 years when fear was more palpable. In complacent bull markets, sentiment is less reliable because greed is not as strong an emotion as fear. So here is one vote for traders who rely heavily on sentiment to be left behind by this stubborn bull.
For the next several months, you have to be bullish. I am not recommending buying stocks right now, as I see a shallow pullback in the next two weeks. But if you had to place a trade now and couldn't get out for 6 months, I am a much better buyer than seller.
Why am I saying this in the face of such bullish sentiment? Because the one thing that has made traders reluctant to embrace stocks is jobs. And jobs will be more plentiful in 2011 than in any of the past 3 years. The lower unemployment rate will drive expectations for earning growth which will lift stock prices. The Fed is a nonfactor for the next couple of meetings until we get closer to June, at which point we may see some weakness come in due to expectations of the end of QE2.
As for the first trading day of the year, I am looking to enter short in the first half of the day looking for weakness in the second half of the day.
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1 comment:
The biggest bear capitulates. Sounds like the media and front page news. Must be time for a pullback.
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