Tags: Hulbert | Stock | Market | Jump

Hulbert: Stock Market Will Jump Before Tumbling

Wednesday, 17 Feb 2010 02:04 PM

The stock market will briefly trade higher before heading down very soon, investment guru Mark Hulbert claims.

Hulbert, editor and publisher of the Hulbert Financial Digest, indicates that the buzz on the street is that the bears are arguing the stock market will be much lower a year hence.

“Advisers are returning from their three-day holiday in a decidedly melancholy mood,” Hulbert wrote in a recent column for MarketWatch.

“And that gives contrarians hope that the bull market that began last March is not yet over — recent market weakness notwithstanding.”

Hulbert notes that he has been tracking the average recommended equity exposure among a subset of short-term stock market timers, and there has been a 45-percentage-point drop in the average recommended exposure level.

“This suggests that by no means are we seeing the kind of stubbornly held bullishness that is a hallmark of major market tops,” writes Hulbert.

“On the contrary, it would appear as though the veritable wall of worry’ that bull markets like to climb remains alive and well.”

Though the market is just as high today as it was four months ago, advisers are far more “gloomier” and more likely than before to see the glass as half empty rather than half full.

“Other sentiment barometers are telling a similar story, by the way. Investors Intelligence, which in late December was reporting a dangerously high level of bullishness, now rates the sentiment picture as, if not outright bullish, at least close to being so,” writes Hulbert.

“The same goes for the sentiment survey that the American Association of Individual Investors conducts of its members visiting the organization's Web site," he wrote.

"Those who reported that they were bullish, expressed as a percentage of those who said they were either bullish or bearish, rose to 68.2% during the last week of December. During the latest reporting week, in contrast, the comparable proportion was 46.7%.”

If a bear market comes, it will likely be steep.

Zacks Investment research reports that during the last bear market, from 2000-2002, the market tumbled down 37.6%.

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The stock market will briefly trade higher before heading down very soon, investment guru Mark Hulbert claims. Hulbert, editor and publisher of the Hulbert Financial Digest, indicates that the buzz on the street is that the bears are arguing the stock market will be much...
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Wednesday, 17 Feb 2010 02:04 PM
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