Yes, we had a little relief last week. A little of that fluff from a few weeks ago has been taken out of the market...but it is not that easy to fix the "Wall of Worry." We are not pulling for immediate gratification. Our bull market scenario is that we will see a multi-year advance in the next few years without a significant bear market appearing.
We've seen the first whiff of optimism...I suppose. Obviously, the speculators that make up much of our measurement of pessimism and optimsim did get a touch too bullish. Hence, our Psychology Composite moved to P5 - only one step from the bottom. But the "Wall of Worry" still has a few cracks.
Here it comes...I can't resist telling you again. Psychology is weak, but that one important component is being outmaneuvered by the two very strong components of Monetary and Valuation. You can see so from our Asset Allocation Model gauges pictured below.
However, from a short-term perspective, we would like to have all of the components above pulling in the same direction. And right now, we could stand a little correction to cool the spirits of the short-term speculators, while remaining in this good long-term market.
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