Bizzaro world continues

My how things have changed from 10 years ago. Coming into 2001 the market had entered the early stages of a big bear market. The market trend was firmly down as was the direction of earnings and general economic activity. The pessimism was building but the majority of retail schmucks and the popular gurus du jour were still bag holding bulls. Then in early January the fed came out with surprise .5% rate cut which temporarily ignited the market. The bulls were dancing on the streets as they were proudly advertising that according to history every single time the fed cut rates, the market was higher a year later....except for 1 time. Any guess as to when? Yep, you got it; after the 1929 crash...which had so many similarities to the 2000 tech crash! Yet the bulls were oblivious to this. As a bear at the time, I had to admit it did give me some doubts. It took courage to be bear back then, just like it has taken courage to be bullish these past couple of years and even now. Back in 2001 the majority was hopeful the fed would succeed whereas now there is no shortage of fed haters/skeptics. Its bizzaro world folks. Back in the summer of 2009 I made a post whereby I hypothesized that we were in bizzaro year 2000. 2010 was another bizzaro year and I believe next year will be one as well. Whereas most retail schmucks 10 years ago were bruised but hopeful bulls, I believe most retail schmucks now are bruised but hopeful bag holding bears.

A news item floating around the bear circles is a recent bullish article in USA today which says strategists are encouraging people to buy stocks. The bears are pointing this out as a contrary indicator. This is grasping at straws if you ask me. As I mentioned with my previous post, the average Joe Blow out there is still bearish/skeptical about the economy and in my opinion that counts more than bullish strategists. These guys might be saying "buy stocks" but most people haven't been doing that and I'm sure a lot of people would say "fuck you I'm not buying stocks" when they read that article. What people do with their money counts more than lip service. By the way, coming into 2010, the average year end price target for the SPX predicted by Wall Street strategists was 1222 as I posted here. Turns out they were pretty accurate.

I also find it interesting how I see so many of the bearish ilk point out this USA today article. It was just like how they were all pointing towards the negative ECRI leading index readings in the summer. Remember that? I made a post about it. This indicates desperation, "slope of hope” type behavior on the part of the bears....and how ironic is that given that the phrase "slope of hope" is known to characterize the bulls during a bear market. As the saying implies, bear markets descend upon a slope of hope, i.e. bulls are foolishly hopeful throughout a bear market and it's this hope which prevents true capitulation needed to mark the end of a bear market. This time around it's the bears who have been foolishly hopeful...hopeful that the bull market will soon be over and so they grasp at any sort of data point or contrary indicator to justify their refusal to capitulate.

Bears riding the inverted slope of hope...yet another example of bizzaro world!