What underlies the current rally? An excess of pessimism led to the breakout to a new trading range, says Jim Bianco:
The New York Times – Paul J. Lim: The Sunny Side of Doom and Gloom
No wonder that investors have shown little confidence in the staying power of the latest rebound, which since Oct. 3 has lifted stock prices by 13 percent, leaving the S.& P. at 1,238. Last week, the Investors Intelligence adviser survey, a widely followed gauge that tracks the opinions of more than 100 independent investment newsletters, showed that bears continued to outnumber bulls even though the index had climbed almost half the way back. But sentiment can be a funny thing. The best thing that Wall Street may have going for it right now is that so many investors are pessimistic. That’s because the mood in the market is often regarded as a contrarian indicator of future activity.
Click to enlarge chart:
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Source:
Bianco Research
Charts Of The Week
Updated Pictures of Current Interest, October 26, 2011
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