The bears have literally disappeared

Wow, I know things are better than they were one year ago but are they so dramatically better with little downside risk? According to stock market newsletter writers the answer is yes. The level of Bears in today’s Investors Intelligence reading fell to 15.6% from 16.7% last week and is now at the lowest level since April 1987. Back then the bulls were right for another 6 months and then something bad happened. Combine this sentiment reading with the VIX at 20 and 2010 will be interesting, especially with the very likely prospect of higher interest rates. Bulls are at 51.1% and those expecting a correction but are long term bullish total 33.3%. Ahead of tomorrow’s PMI manufacturing index in China, the Yuan spiked (relatively speaking) upward to the highest level in 2 1/2 months. We’ll see if this is an end of yr anomaly or another step by the Chinese government to cool things down. The Chicago PMI and 7 yr note auction highlight the news flow of the day.

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