For about a month now, this market has been creeping higher slowly but relentlessly. I have to admit, that's bull market behavior however, let's not get too excited here because one month's action a trend does not make. Sentiment continues to show a remarkable divergence. On the one hand, AAII is showing extreme bullishnessnes again this week and bears are salivating over this. But what is retail actually doing with their money? They aren't putting their money where their mouth is that's for sure. AMG reports only $3.5 Billion in inflows this week which is peanuts. So far since this rally started in late November, net inflows into equities are about 0....it might actually be a slight negative. While I think it's just a matter of short time before retail capitulates and jumps back in (right in time for the next major decline of course!), until they do, the benefit of the doubt goes to the bulls and any downside should be relatively mild.
My game plan is to continue to look for entries in small cap long plays that I can be a strong holder of should I get "caught" by an unexpected major sell-off in the market. Again, I don't expect to see one until more people embrace the market...and not just with "feelings" but with actual money. Eventually I expect to be at least partially hedged.
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