All indexes closed higher last week although the reaction to Friday’s positive jobs data was disappointing. NYSE averages all returned to their chart peaks while smaller stocks lagged, still trading 3%-5% below their highs. That was noted by many advisors along with the further NY advance decline line records. Others mentioned the divergences and lack of stock highs. The end result reflected a bit more optimism from the professionals and the bulls entering danger territory, increasing risk. They favor domestic shares seeing little alternative to equities. Some other sentiment surveys tract the general public. They show bulls and bears even’, reflecting wariness and cash on the sidelines.
The bulls edged higher to 55.8%, after a larger move up to 54.7% a week ago. We rate readings at 55% as cautionary; pointing to a near fully invested stance amongst professionals. That is where we are again. It had been briefly visited over the last few months with some market retreats following. The bulls were higher late November and for all of December 2013, reaching a crescendo at 61.6% level the final week of last year. Markets then corrected to early February lows and the bulls fell to 41.8%. That signaled cash ready to invest.
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