Anybody Left to Buy?

Five reports suggest that contrary to popular belief, the "crowd" -- investors, traders, and market advisors -- is bullish (and invested):

Make No Mistake... Institutional Investors Are All In" (Business Insider)

According to Morgan Stanley, there's no question about the state of big investors sentiment. As they put it, investors are "all in" on this market

"Hedge Funds Capitulating Buy Most Stocks Since '10 Amid Gain" (Bloomberg)

Hedge funds trailing the Standard & Poor's 500 Index for the last five months are giving up on bearish bets and buying stocks at the fastest rate in two years.

A gauge of hedge-fund bullishness measuring the proportion of bets that shares will rise climbed to 48.6 last week from 42 at the end of November 2011, the biggest increase since April 2010, according to data compiled by the International Strategy & Investment Group. The Bloomberg aggregate hedge fund index gained 1.4 percent last month, lagging behind the Standard & Poor's 500 Index by 2.65 percentage points.

Money managers struggling to catch up with the gains have contributed to the rally that pushed the S&P 500 up 27 percent since October as economic reports beat estimates. Market bulls say they are a continuing source of cash that can move stocks higher. Bears say capitulating hedge funds are further evidence that equities have risen too far, too fast as economic growth remains sluggish, warning that the pool of potential buyers is being depleted.

"A Euro, A Yen, & Gisele (by TnRevolution)" (Slope of Hope)

The below chart is from decisionpoint.com.  Take note that the Rydex [A financial services firm whose mutual funds and ETFs are favorites of more active traders] asset ratio is currently breaking out to new highs over the past 10 years, which shows an extreme amount of bullishness on the part of investors.

Carl Swenlin of decisionpoint.com states, “Digging deeper into the numbers, … Money Market Assets are near 10-year lows, which indicates that Rydex investors have very little money on the sidelines with which to make an additional commitment to bullish positions. Also, Bear Fund Assets are near 10-year lows, demonstrating that Rydex investor expectations for bearish outcomes is very low. These bullish attitudes are bearish for the market because it appears that there are very few resources left to fuel a continued price advance."

"Average Investors May Finally Be Lured Back Into Stocks" (CNBC)

Bullish sentiment among the most active clients of Charles Schwab hit its highest level since the current bull market began, according to a recent survey by the firm.

The jump in optimism from this group may signal the less active crowd will soon follow, propelling the rally to a fourth year, market analysts said.

Fifty-one percent of individual investors who trade frequently are now bullish, according to the Charles Schwab Active Trader Sentiment Survey, the highest level since they began surveying these clients in April 2008.

"Mark Hulbert: Market’s Long-Awaited Correction at Hand" (MarketWatch)

Commentary: There is too much bullishness and complacency

The stock market’s long-awaited correction appears to have begun.

I say this because the market’s successful assault on Dow 13,000 brought a number of eager bulls out of the woodwork — so much so, in fact, that even though the Dow Jones Industrial Average has now fallen back to just above that 13,000 level, there is a lot more bullish sentiment than existed just two weeks ago.

That’s worrisome from a contrarian point of view.

Consider the average recommended stock market among a subset of short-term stock market timers tracked by the Hulbert Financial Digest (as measured by the Hulbert Stock Newsletter Sentiment Index, or HSNSI). After the Dow’s initial failure in late February and early March to burst through the 13,000 level, this average dropped by March 9 to as low as 17.6% — which meant that the average market timer was keeping more than 80% of his equity portfolio out of the market.

Today, even though the Dow is less than 1% higher than where it stood then, the HSNSI stands at 42.1%. So a tiny net increase in the market has led the average market timer to increase his or her equity exposure by 25 percentage points.

That’s not reminiscent of the veritable Wall of Worry that bull markets like to climb.

But then again, maybe this time is different, and the stock market doesn't need addiitonal  buyers, cash, or good news to move higher.

No doubt some bulls will argue that mom and pop investors have yet to join the party. Given that a great many of them are in or near retirement and have far fewer assets than they need to survive as a result of multiple burst bubbles, a global financial crisis, chronic bad advice, and a brokerage community that likes to rip their eyeballs out, I'm not sure I'd put much faith in that.

Of course, I could be wrong. Perhaps I am the greater fool.

Comments

[roger,]

The American worker on the endangered species,his/her hands
no longer needed,automation does a better job,his/her brain
replaced by electronic technology,faster and cheaper;the
value of his/her labor considerably downgraded by money
making money,by cheap foreign labor. American labor force
no longer a source of profit but a costly liability,food
stamps,health care,old age etc... Even the working horses
of the 1900's had a better deal,the lucky ones became
pampered pets,no such luck for the working stiff who is no
longer exploitable.

[Tom]

You hit it right on the head, Roger. American labor better start investing in their own local shops if they want to make anything at all or provide service to their community. What gets me is all the kids still "going to college" like it's some magic way to a big paycheck (it would be more advantageous to become an electrician or plumber in my view). There's been a huge boom in nursing education over the past decade so that even THEY are having a hard time finding jobs now. Doctors are in short supply too as the old ones retire and very few want to take their place with all the problems we're having regarding insurance-based "health care" not to mention the high cost of med school.
So what are all these young people to do? They can't all be funeral home directors.

[Wolfie52]

Virtually all the money I have made in the "markets" in the last few years has been from foreign markets, shorting the S&P 500 and crude oil futures. In my retirement account (where I cannot short the market) I buy and periodically sell when the profit is there. When the market finally understands the demographics of America, Japan, Europe and even China are all turning negative, AND that Peak Oil (oil-which underlies all that is financial) are determining the future---and it is not going to be pretty.

[Look the other way]

Financial Oligarchy and the New Robber Barons w/Derivatives Guru Janet Tavakoli

http://youtu.be/wTWKT3pZgT8

[Mom and pop are too worried about their kids]

Obama Relies on Debt Collectors Profiting From Student Loan Woe

The debt collector on the other end of the phone gave Oswaldo Campos an ultimatum:
Pay $219 a month toward his more than $20,000 in defaulted student loans, or Pioneer Credit Recovery, a contractor with the U.S. Education Department, would confiscate his pay. Campos, disabled from liver disease, makes about $20,000 a year.
"We're not playing here," Campos recalled the collector telling him in December. "You're dealing with the federal government. You have no other options."
Campos agreed to have the money deducted each month from his bank account, even though federal student-loan rules would let him pay less and become eligible for a plan -- approved by Congress and touted by President Barack Obama -- requiring him to lay out about $50 a month. To satisfy Pioneer, Campos borrowed from friends, cut meat from his diet and stopped buying gas to drive his 82-year-old mother to doctor's visits for her Parkinson's Disease.
181,000 Complaints
Debt collectors are the subject of more complaints to the Federal Trade Commission than any other industry -- almost 181,000 last year. Within the past 17 months, three companies working for the Education Department -- including one that is majority owned by JPMorgan Chase & Co. (JPM)'s private-equity arm -- settled federal or state allegations of abusive debt collections. The companies didn't acknowledge wrongdoing, and Chase declined to comment. The Education Department said the government investigations didn't involve the companies' work for the agency.
http://finance.yahoo.com/news/obama-relies-debt-collectors-profiting-040100344.html