As we talked about yesterday, a small bounce was expected on Thursday and we had it. The small caps did not participate however, likely because of the fear of accelerated interest rates increases which affects smaller growth type companies more so than larger companies.
After the close, Intel gave their mid-quarter update and things sounded pretty good. That should give tech stocks a little relief but I still don't believe a strong rally is in the cards right now. Why?...
For one thing the new AAII Investor Sentiment Survey came out and the percentage of those polled who said they are bullish actually climbed from 40% to 50%. That's the highest reading this year and the highest since the last market high was reached at the end of December. The percentage of those who were bearish was 25%. That's just too low to say we've seen a bottom put in. That 50% bulls, 25% bears 2 to 1 ratio is a bearish reading for the market.
Chart provided courtesy of www.decisionpoint.com
As a reminder:
Bulls = Those who believe the market will go up.
Bears = Those who believe the market will go down.
Too many bulls or too few bears = bearish or negative for future market action.
Too many bears or too few bulls = bullish or positive for future market action.
Always a confusing and misunderstood concept, particularly to new investors.
The short term oversold condition we saw after Wednesday's sell off has been corrected back to neutral after Thursday's small rally. This is why I suspected any rally would be short lived. If Intel's good news can't stimulate some buying interest, I don't know what the stimulus would be, except perhaps if oil prices drop.
Not that the seasonality data has been very accurate lately, but if you look at the March seasonality chart at the bottom of the page, you will see that 3 of the next 4 days are historically pretty strong (today is the 9th trading day of March). But that ends the better half of March. As you can see from the chart, the second half of the month is nowhere near as strong historically as the first half.
That's all for today. Currently 100% G fund. Have a good weekend.
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