The Bulls Are Winning

 | Feb 04, 2013 | 8:45 AM EST  | Comments
  • Comment
  • Print Print
  • Print

"The degree of one's emotions varies inversely with one's knowledge of the facts." --Bertrand Russell

The news media is very excited about the Dow Jones Industrial Average hitting 14,000 for the first time since 2007. Individual investors, not so much.

Ever since the market bottom in March 2009, we have had a series of very strong V-shaped rallies. At least a half dozen times we have had multi-month, straight-up moves that looked like they would never stop. Shorts get squeezed and underinvested bulls can't catch up.

What is most interesting about these moves is how little excitement they have produced among individual investors. The response is that it is just another manipulated move produce by the Fed and the computers and really has nothing to do with the health of the economy and individual interest in the stock market.

The latest move has been a little different in that regard. There have been sizable inflows into equity funds and there is talk that, although the economic recovery is still painful slow, we are at least going in the right direction and confidence is returning.

The bears have the same response they always have: the market is simply ignoring a slew of negatives again and there will be a day of reckoning. They have been wrong about this for nearly four years, but with so many people still suffering from the fallout of the Great Recession, the idea that the market is misleading has great intellectual appeal.

The one great lesson of the market over the last four years is not to look for reasons to fight the trend. That has been the single biggest mistake you can make and it is very easy to make if you apply common sense. There are so many reasons, technical and fundamental, to think the market can't keep running, but they simply haven't mattered.

What I find most challenging about the market is that we so seldom have the level of excitement among traders that I have associated with past trends. There is talk about bullishness and hopes that the market is finally moving on to a new stage that will attract those who have forsaken it, but I see few signs of the interest prior to the 2008-09 crash.

The best way to deal with this is to maintain a positive bias until there is clear change in the price action. You can't be too anticipatory or you will be burned just like the bears were on Friday.

Riding a trend isn't as easy as it sounds, but it sure pays much better than constant top-calling. You can find good reasons to battle the bulls, but the simple fact of the matter is that they are winning and we need to stick with them.

Oracle (ORCL) is buying Acme Packet (APKT) and that is helping to spike some tech names, but we have a mixed start this morning as it looks like traders are a bit hungover from the Super Bowl.

Columnist Conversations

Facebook continues to look vulnerable to me. I believe the stock put in a significant high on May 11 and...
Shares of MSFT have been in the red all session. MSFT and VZ are to two big laggards in the Dow Industria...
Bloggers are not as bearish as they were last week. Last week they were about 60% bears, this week they have c...
I'm somewhat limited in the number and frequency of reports I can post via Real Money from an upcoming series ...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.