"Fewer and fewer investors are expecting the market to fall from near current levels."
Short-Term Update, Sept. 13
The major stock indexes have so far seen modest gains in September, but "modest" is not how some people see the market's future. The president of an investment banking firm appeared on CNBC yesterday (9/13), and declared that he believes the stock market will "explode higher:"
"Short-term, markets are on solid footing—I’d liken it to a rocket ship that’s gassed up with a lot of fuel."
Wow! That's great news for the bulls, and very bad news for the bears -- if he's right.
And there's no shortage of those who do believe he's right. You see, CNBC's website also quoted a legendary hedge fund manager, "Maybe [the market] won't go much lower." Another story said that no less than the CEO of Morgan Stanley says investor confidence is slowly returning.
And let's not leave off yesterday's financial news from Bloomberg, which reported: "Buffett Rules Out Double-Dip Recession..."
Optimism among the powerful and well-known may indeed be hard to resist.
Yet it's the ability to "resist" conventional wisdom that defines independent thinking.
Back in May, EWI's Robert Prechter could very well have been writing about the present when he said this in the Elliott Wave Theorist:
"The past ten years have seen an unprecedented sustaining of optimism in the face of deteriorating financial market and monetary conditions and a deteriorating economy. Even though the market is about to begin its greatest decline ever, the era of hope is not quite finished."
When do we expect the "era of hope" to conclude?
The answer: during the "point of recognition." As Prechter explains, that "point marks the time at which investors in the aggregate stop focusing on the market’s upside potential and start worrying about how far down it will go."