Sentiment Still Showing Ample Skepticism

They say a bull market likes to climb a 'wall of worry'. So you need to have fairly persistance skepticism that the rallies can continue. And as the market stairsteps higher, only slowly does it drag investors away from the sidelines and into the market. The incremental buying power continues to drive share prices higher, until the last marginal buyer is in the market.

So we continue to monitor investor psychology, especially with each little pullback in the market. And true to form, each time the market pulls back from its highs, the chorus of bears come running out to exclaim that the bull market is over and a new bear market is imminent.

The SPX is roughly -2% off its highs right now, but there is ample skepticism by investors. To wit, the put/call ratio has average 1.10 over the last 5 days, and over 1.01 for the last 10 days. That is a lot of put buying, as options investors worry about protecting their portfolios from losses, and speculators continue to look for any opportunity to bet agains this market.

The AAII survey has also showed few bulls than bears in 5 of the last 6 weeks. This is another anecdotal piece of data showing how pessimistic individual investors are. And even the big Wall St. strategists are cautious, with price targets barely higher than where we stand today.

The chart above shows that June is not the best month for the market, on a seasonal basis, but I think that the 2nd half of the year will be very good.