Market makes new highs....but still getting no respect

Anytime the market makes a new 52 week high like today, I like to get a feel for what the amateur traders/investors are thinking. Normally and naturally, you would see enthusiasm and some enthusiasm is perfectly justified. Only when you see euphoria should your contrarian radar go off. Instead, I'm still seeing plenty of disbelief and hatred which means the suckers are either still short or sitting on the sidelines. Based on anecdotes, I find that a lot of the trapped bears from 3 weeks ago are still trapped. One by one they are giving up but only by force not by choice (i.e. not because they converted to bulls). Many of the bagholders appear to be holding April puts it seems. Thus, it wouldn't surprise me to see the market go higher or sideways from here until close to April expiration to crush these jokers first and then we see a sell-off of significance. That would be quite fitting with the motto of this blog wouldn't it? But don't be piggish here. The market is quite extended in the ST and it would be prudent to starting take some longs off the table here or use something like a covered call or collar strategy.

We could still very well (and probably will) continue to see new highs with some shallow dips along the way but the risk/reward in the ST isn't really good here on the long side. But for LT positions, the outlook is still good. Earnings are trending up, monetary conditions are still very accommodative and the retail suckers who have been getting crushed since last spring are still showing little in the way of humility. Sure, many are quite depressed, angry and frustrated (which is a sign that a ST pullback isn't too far off) but they are still not giving this Bull Run any respect whatsoever.

I continue to see commercials on TV which say things like “in times like these” or “in this economy”. The most powerful and reliable contrarian indicator is when you see the stock market act completely opposite of the sentiment towards the economy you see in commercials, TV shows and in movies. By the time the lemmings in the media are aware and convinced of a trend in the economy or the stock market it’s probably close to or already done running its course and man did they ever nail it. The media has been bearish for well over a year now in commericals, sitcoms and even movies. Micheal Moore's movie "Capitalism: a love story" was released last year which discusses how people are getting screwed by the greed in Corporate America. That guy needs to drop a couple of tons. In April the movie "Wall Street 2" is going to be released and the focus of the movie will be about a financial meltdown similar to that of 2008, yet another example of the media being late to the party. Wall street 1 was released in 1987 whereby the famous catch phrase in the movie is “greed is good”. What happens in 1987? The biggest crash since 1929. You see what I mean!? The media is the ultimate dumb money indicator and they are still bearish folks. Just remember that during the next correction.