Skepticism Leads to More Market Momentum

Amid a wealth of potential problems, markets are now close to record highs. Military conflicts in Syria, Iraq, Gaza and Ukraine are an unending source of concern. Domestically, economic growth remains below potential. The civil strife in Ferguson, Missouri, reveals the U.S. to be a nation even more divided than previously thought by many. At the very least, the buffoonish local cops there are a national embarrassment.

None of this seems to matter to Mr. Market. He continues to power on, oblivious to issues that don’t affect corporate earnings. They have, by the way, been stellar, growing at a 9 percent annual rate. Meanwhile, interest rates are still low and inflation is subdued.

Rarely have conditions for market gains been so promising at a time when investor psychology has been so negative.

Gallup reports that only 7 percent of those surveyed were aware of last year’s scorching gains in the Standard & Poor’s 500 Index. “Fewer than one in 10 aware that stocks averaged 30% increase in 2013,” read one of the headlines on a report from earlier this month. More than half of those polled would put any new cash into bank accounts or CDs, eschewing equities, according to the survey.

The less interested the public seems to be in stocks, the higher they seem to go. Stephen Suttmeier, technical analyst at Bank of America Merrill Lynch, points out that the present rally is the fifth-longest since 1928:  continues here

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