Thursday, May 1, 2008

Market Shifting Focus, Will it Continue?


Everyone seems convinced that THIS is the real move, that Bear Stearns marked the low. The money is shifting from weak dollar plays back into your more typical holdings like financial stocks, pharmaceutical, insurance, technology etc. One thing I've been keeping an eye on is investor sentiment. I was viewing the ultra low sentiment a couple months ago as a bullish theme. Well, it has completely reversed. Take a look at this graph of the panic/euphoria model published by Barrons. The graph tells us quite a bit. The question is, are investors acting a little too quickly here? Have we seen enough evidence to be bullish again? That's what the banks are telling us. That's what those on tv are telling us. But I tend to be skeptical as those were the people saying banks were fine last year.

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