Mainstreet far from giddy about the market

I just read an article from the investing section of Macleans.ca, a mainstreet type magazine. In it discusses how people are still emotionally scared from the crash and are reluctant to get back in. You can read it here. I've always said that the most reliable and powerful contrary indicators is when you see mainstreet sentiment in opposition to the primary trend of the market. When that happens it's quite a reliable sign that the primary trend is in no danger of ending. It's clear to me that mainstreet still has plenty of contempt towards the market. I know this is just 1 article but I get the sense of this anecdotally as well.

If the bull market from March 2009 has seen it's high at 1246, it would probably be the first time in history that a bull market has ended when 1) The bull market is less than 2 years old 2) A large portion of Mainstreet is still afraid of the market 3) Monetary conditions are very accommodative. Therefore, it's EXTREMELY unlikely that the bull market is over correction or no correction. Just remember this when the market starts going down and things look scary.

I see bears out there trying to make the case that based upon sentiment indicators people are as bullish as they were in 2007 at the top of the market. I don't want to sound like a broken record but again I must stress that the sentiment indicators these bears are using are only applicable to the ST or IT. In addition, it is not uncommon to see extreme, chronic bullish sentiment early in a bull market (time wise, not advancement wise) when the evidence starts becoming overwhelming that the recovery will be self sustaining. This is what happened from mid 2003 to early 2004 wherby we saw sentiment go way off the charts bullish. The market ignored this extreme sentiment until March of 2004 and when the rally did finally end, what ended up happening was a multi-month consolidation wherby the market was down only 10% at its lowest point. After that the bull market resumed course in the fall and made new highs by the end of the year.

The last missing pieces to the recovery are jobs and housing. This is pretty much what the bears are clinging on to. It shouldn't be much of a surprise that these 2 things are still weak given that jobs are a lagging indicator and housing was the epicenter of the crisis and is also influenced by the job situation. Let's look at the jobs situation. Initial claims for unemployment came in today below expectations at 420K dropping the 4 week moving average to about 423K, the lowest level since August 2008. 400K is the magic number which in the past confirmed that significant and sustained job growth is on the horizon and given the trend in place it's very likely we will see this threshold breached in 2011. Once the job situation is on solid footing, housing should follow suite. If this happens to be the case, forestry stocks could do very well next year. I am making a list....checking it twice