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David Rosenberg: Signs of Exuberance Abound (in Today’s Market)

by Brett on January 4, 2011

Courtesy of David Rosenberg, Chief Economist at Gluskin Sheff:

  • The VIX index, at 17.5x, is back to where it was last April.  Remember what happened next.
  • Investors Intelligence bullish sentiment is back to where it was at the all-time market highs of October 2007.
  • The non-commercial accounts on the CME have recently opened up a considerable net speculative long position in equities, particularly the QQQ’s (Nasdaq stocks).
  • Market leadership is narrowing, as Bob Farrell has been busy pointing out.
  • The number of short-selling positions slid 2.2% in the first half of December on the NYSE; and by 2.8% on the Nasdaq.  The bears are running scared.
  • As Kelly Evans asserted last week, the AAII investor sentiment poll has been above its historical norm now for 17 weeks running –  the longest stretch in six years.
  • Since July, margin debt has exploded by 16% to $274 billion, the most since September 2008 when people still thought we were in a soft landing.
  • Equity mutual funds and ETF’s took in $24 billion in December (TrimTabs data) – when bonds were attracting inflows like this last year, the vast majority believed the fixed-income market was in some sort of bubble, which was to be avoided.

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