Sometimes it's hard to hear an approaching bear's footsteps because of the noise coming from the "Happy Campers." They can be a loud bunch -- going on and on about how that bear who ransacked camp the last time is long gone by now. They seem to be unaware that the same bear may still be roaming nearby.
Include well-known market commentator Abby Joseph Cohen of Goldman Sachs among those who are loudly positive about stocks:
"...we think the S&P 500 is underpriced not just based on 2010 but also a 2011 outlook."
CNBC (10/4)
Some of the "happiest campers" are mutual fund managers. Here's what EWI's Robert Prechter wrote in the September issue of The Elliott Wave Theorist:
"Mutual funds’ cash holdings have just reached...the lowest reading in the 60-year history of the indicator! Previous extreme readings occurred in 2000 and 2007...the majority is still historically optimistic, which is not the way bear markets end."
If another "ransacking" by a bear is possible, are there any useful signs to watch for?
One way is to scrutinize the trail for evidence of previous "bear behavior." In turn, a tracker then must put the data into context.
Our analysts have done just that. They discovered that a sizeable bear market from the past has "a similar pattern, price and time configuration" to what is unfolding in the DJIA now.
The just-published October issue of The Elliott Wave Financial Forecast provides a chart of exactly how similar these patterns are -- you can see for yourself the evidence of the earlier "trail," and apply that knowledge today.