We don’t want to be the orange blossom in the punch bowl, but it’s time to acknowledge that sentiment figures look too bearish at the moment for the stock market to collapse. Bearish gurus have outnumbered bullish gurus for twelve straight weeks in the Investors Intelligence survey, and the figures have been growing steadily more extreme with each passing week. The latest survey had 43.6% of advisors bearish and 31% bullish. The last time we saw numbers like that was in 1998, at the beginning of the tech-stock boom. Couple that with the fact that it’s an election year, and you have two good reasons not to bet the ranch right now that the stock market is about to fall apart.

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Not that a 3000-point swan dive by the Dow wouldn’t feel right as rain as far as we’re concerned, especially since the Fed has just unconvincingly extended moral hazard to blanket the earth. We wish them all possible success, but the idea of swapping the Treasurys in the Fed’s portfolio for a mountain of subprime garbage presently held by the biggies of the banking world smacks of desperation. Toss in a real estate collapse and the rapidly steepening recession, and who wouldn’t think stocks are headed for disaster. But paradoxically, the lopsided bearish consensus is the most bullish thing the stock market has going for it right now. And although our fellow gurus are not necessarily wrong most of the time, when too many of us line up on the same side of the market, as is presently the case, the record shows that we become a reliable contrary indicator at major turning points.

Ganging Up on Gold

Rick’s Picks  is probably more bearish than most, since it is not mere recession that we have been expecting and writing about, but a full-blown debt deflation. This has attracted a like-minded following of traders and investors, many of whom weigh in daily in the chat room. Bullish talk has been scarce in the room – except, perhaps, where gold and silver are concerned. Is it perhaps time for us to ponder the reason for the stock market’s reluctance to dive – namely, ourselves. For, to the extent we have acted already in anticipation of lower share prices, we have removed ourselves from the pool of sellers who alone could cause stocks to fall.

Better, perhaps, that we should focus on bullion, which by and large and for years has been doing what we have expected of it. This is notwithstanding gold’s seeming reluctance the other day to move higher when the Fed issued its most inflationary manifesto yet. At the time, we ascribed bullion’s lackluster performance to fears that the Fed has already lost the battle to re-inflate the financial system. But we surely wouldn’t rule out the possibility that, before the Fed announced this latest bailout, it had arranged with other central banks to suppress any hint of insurrection in the precious metals pits with massive bullion sales. The ploy may have worked, at least for the time being, but it was hard not to notice that the conspirators were unable to hold back the populist tide in gold shares, which soared. A harbinger of the future, perhaps?

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Night Class in April

There’s good news if you’ve wanted to take the Hidden Pivot course but have been unable to attend on weekend mornings.  In mid-April, I’ll be conducting the six-hour class over two consecutive evenings – Wednesday and Thursday, April 16-17, from 6 p.m. to 9 p.m. MDT.  Click here, and then on the “Upcoming” tab to register; or here if you would like more information as well as a detailed description of the Hidden Pivot Method and a free Hidden Pivot calculator.