The bears moved deeper into hibernation this week with their lowest reading since 3-Apr-87, more than 22 years ago. That year saw five more months of gains, with the DJ Industrials moving from 2,335 in April to a high of 2,709 in late August. That action preceded the crash that October. These fleeing bears did not move into the bullish camp, as their number declined too. Instead there were more editors moving to the correction camp. There are lots of skeptical bulls out there and that is better than a lot of roaring bulls.
The bulls were down to 51.1% from 52.2% the last two weeks. That was their highest since December 2007, when their number was retreating from 62.0% shown at that Octobers all-time market high. A year later at the first bear market lows the bulls had slipped to just 22.2%.
The bears were down to 15.6% from 16.7%. Their April 1987 reading was 14.5%. At the market highs in October 2007 the bears were 19.6%. A year later, the bears reached a fourteen year high at 54.4% when few editors were positive for equities.
Advisors classified as correction were up to 33.3% from 31.1%. This group is mostly bullish but they expect an intervening market retreat before the rally begins. They look to buy on dips. Advisors often shift from bearish to correction before they are ready to make a bullish commitment and vice versa. The 35.1% reading from three weeks ago was the highest since the 35.3% from 3/13/92
The averages are now on a six-session winning streak, though daily volume is well-below average and few stocks are showing daily P&F chart changes. In addition, we see fewer than half of our forty-six sector indicators with an upward direction and positive chart formations. Those negative divergences are worrying some of the advisors causing the shifts to the correction camp. Markets do climb a wall of worry and editors looking for corrections are worried bulls".
The difference between the bulls and bears was 35.5%, unchanged from last week and bearish. The spread was 40% in Oct-07.
The 10-week average of the "bulls over the bears" [eliminating the correction] hit 72.0%. That is its highest since July 2007.
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