Friday Pre Open (Thurs. Eve.)

No bears aroundThose expecting stocks to decline in the coming months are becoming hard to find. Bearishness among newsletter writers and individual investors is among the lowest in 25 years.  According to Sentiment Trader.com, active investment managers are not only "not bearish", they're outright bullishness. According to the National Association of Active Investment Managers, the average manager is 91% exposed to stocks. Their Intensity level, a phrase coined to show the difference between the most bullish and most bearish manager, is at its 2nd-highest level ever. The only other times this kind of exposure and intensity were seen were early January 2007 (stocks rose for weeks, then gave it all back) and early February 2013 (stocks rose for weeks, then...rose some more).

Spx closed at a new all time high, while the Dow finally closed above 16,250 for the first time in a month.  This is the burst we mentioned early Thursday morning, which puts 16,330 +/-20 into view.  Anything above 16,500 puts the Megaphone measurement into focus, which is 16,864 +/-.  Will it, can it?  Absolutely, and in one day if it wants to. But, then what.  Just because the collapse hasn't come doesn't mean it's not coming.  Remember this cartoon?  Make sure you click to expand it, so you can read it.

situational awarenessIt's the situation now, as it was the exact situation, when I originally found it in 1999.  In fact, I used it in the classes I taught around the country when day trading was in its infancy.  WaveBOOM is standing on the beach, looking out to sea, waving to get out of the way of the tidal wave that is cresting, and about to crush the beach-goers.  There's so much excitement and noise from the crowded beach, that no one can hear us yelling to run; only see us waving.  So oblivious to the reality of what IS coming, the crowd on the beach just stands (backs to the water) and waves back at us.  However, eventually, the wave crests, and crashes down, drowning everyone, because the higher and bigger the wave gets, the more energy it releases upon hitting the beach.

So far, regarding stocks, we're the lifeguards that have the weather report of the hurricane heading toward us, but the storm is being held offshore by the high pressure system.  But, weather, like chart pattern recognition, is highly probability-rankable, even though not perfect of certain.  The only reason stocks are holding up is the Fed, as every economic report for the past few years has shown only manipulated success; not real success.  DSE has allowed us to be ahead of major turns in Tbonds, crude, metals, many stocks, Bitcoins, Nat. Gas, coffee, and nearly everything else that is not being "played" by our leaders (a term I use satirically).

The Fat Lady is singing, and the time is short.  Bolt your doors.

More after the bell, and the Jobs numbers.

Friday Pre Open (Thurs. Eve.) by

About twwadmin

Ken Goldberg is a Registered Investment Adviser, and is the president and chief market strategist at Trading With Waves. Connect with me on Google+
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