Too Much Bullishness
The public is most confident at market tops and least confident at market bottoms. That seems obvious if we look at the two charts below and compare them. Yet invariably when we see a rise in the Consumer Confidence Index, as on Tuesday, the press insists it is a bullish sign. Yes, it is ... if we are coming off a low point in confidence. But note that the maximums recently have coincided extremely well with market tops, and vice versa. Moreover, yesterday's announced level is identical to the levels touched in late spring of last year. That was not a time to buy; it was a time to sell. I see this as a warning, not a bullish sign.Consumer Confidence View Chart » View in New Window » Dow Jones Industrial Average Source: MetaStock View Chart » View in New Window »
Since my observations in the last two columns of the propensity for the Dow Jones Industrial Average to hover around round numbers, the 13,000 level has been crossed many times. This indecision is suggesting a very difficult barricade, and, in view of our overbought indicators, warns of a likely downturn....238 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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