Investors rode the bull to exhaustion until its once-strong legs gave way in late 2007.
When the bull showed the first sign of life in 2009, riders got back on board. This time they've not been content with just riding; now they whoop and holler. Indeed, several sentiment measures are at multi-year extremes. And this after a 64% retracement of the Dow's decline from the (all time) 2007 high to the 2009 low.
"Sentiment is crystallizing so strongly that economists and market strategists have rushed to raise their estimates for 2011."
Elliott Wave Theorist, December 2010
The bull is older now than when riders jumped aboard in 2009. All indications are that he's grown weary again. Perhaps you've noticed in recent days how often the market has given back intra-day gains by the closing bell. But investors continue to ride, and insist that the bull is healthy and strong:
Here's what one well-known money manager forecasted for 2011 in a CNBC interview (12/15):
“...we’re going to go up [at least] 8 to 12 percent unless we get a surprise on the upside.... But I don’t see any surprises on the downside."
A sub-headline on another financial website's front page reads: "U.S. stocks' recent lofty perch to get even loftier" (12/15)
And these are just two drops in an ocean of similar bullish expressions. The Short Term Update (12/15) says: "...the bullish extremes are historic by any standard..."
And returning to the latest Elliott Wave Theorist:
"Even though we said back in early 2009 that our forecasted rally to Dow 10,000 would see a strong renewal of optimism, the depth and breadth of it are more than we expected..."
In the face of indicators which suggest a tiring bull, stock market exuberance simply doesn't add up. What gives?
Read the real story of what is now unfolding in the market. The facts Bob Prechter reveals in his just-published December Elliott Wave Theorist are amazing.
Yes, Prechter includes 4 specific sentiment readings, and pinpoints 3 timeframes of momentum readings. Plus he tells you what the market finds nearly impossible to overcome.
Now is the time to read Prechter's extensive analysis.