• Why I’m Worried About the ‘Big Money’ Bulls

    by  • April 22, 2013 12:02 pm • Broad Market Analysis, Quick Hits • 3 Comments

    The Barron’s Big Money Poll came out over the weekend and it was eye opening.  I mentioned some concerns last week, well, add the Big Money Poll to that list.

    74% of those polled were bullish over the next 6-12 months, the highest in 20 years of the poll.  If everyone is bullish, then who is truly left to buy?  Back in October (the poll comes out every six months), just 46% of those polled were bullish.  Remember, since the end of October, we’ve made new all-time highs and rallied more than 10% on the SPX in the process.  The logical question we must ask ourselves today is with the same people who were so very wrong in October when they were bears, is it worrisome they are bulls now?

    Digging into the poll some more, 86% of those polled were bullish equities the next 6-12 months.  Compare this with just 11% bullish fixed income (bonds) over the same timeframe, and you have two very different pictures.  Now it is worth noting most of those polled are stock guys.  In other words, they are normally going to be bullish stocks and bearish bonds – nothing shocking here.  Still, the very lopsidedness of their opinion is what worries me.

    Something else I found worthwhile was 45% of those polled said we are in the sixth or seventh inning of the current bull run.

    Lastly, 70% think equities will be the top performing asset class the next 6-12 months, versus 16% for real estate, and just 11% for gold.

    Now for fun, compare the sentiment in the covers of the recent two Big Money Polls.  Back in October they wanted nothing to do with stocks.

    Now they can’t get enough of them.  Be aware of the potential contrarian implications here.

    About

    Ryan Detrick is the Senior Technical Strategist at Schaeffer's Investment Research in Cincinnati, Ohio. He joined Schaeffer’s in 2003 and is a frequent speaker and writer on stock market and economic issues and is widely sought after by financial media for his expertise and commentary. Mr. Detrick is a common guest on CNBC, Fox Business, and Bloomberg Television and has been quoted in outlets such as The Wall Street Journal, BusinessWeek, USA Today, Reuters, the Associated Press, and others. With a decade of financial industry experience in the investment and financial services area, strengths include short-term trading with an eye toward timely technical- and sentiment-based trading opportunities, and advanced option trading strategies. Mr. Detrick received a BA in finance from Xavier University, an MBA in finance from Miami University, and has earned his Chartered Market Technician (CMT).

    http://schaefferstradingfloor.com/

    3 Responses to Why I’m Worried About the ‘Big Money’ Bulls

    1. bill signorile
      April 25, 2013 4:14 pm at 4:14 pm

      spirals call for a major top in world markets from 4/25 to 5/9 and major bear phase into 10/20 and a major low in yen within same time fxy targets 96.18 to 93.10 spx 1596 to 1630 focus 1614 to 1627 with bats 1000 at 18077 dow 15180
      wavetimerny@aol.com

    2. rk
      April 23, 2013 3:26 pm at 3:26 pm

      I was beginning to wonder is you were always bullish – now I know better. No one can time the exact top but risk/reward is now more skewed to a small correction, in my opinion.

    3. April 23, 2013 11:27 am at 11:27 am

      Whenever the mainstream media, and that includes the financial ones come out with headlines like this my contrarian instincts kick in. Time to get cautious!

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