It amazes me that the most successful managers could be so bullish at a time like this (way overvalued, way overbought, rising Treasury yields, stalled earnings growth), but of course stocks are most loved at the least desirable prices.
Source: Barrons.com
Speaking of Barrons, their covers used to be a great contrarian indicator — e.g., a cartoon bull gloating or a cartoon bear getting whacked signaled an intermediate top was near; and vice versa.
However, over the past 6 months there have been four different Barrons covers featuring triumphant cartoon bulls (including the one last week where the bull smashed a pumpkin over the bear’s head) … and the stock indices have continued to surge higher (NDX, SPX, RUT) or at least not fall (DJIA).
Valuable indicators come and go, so maybe the Barrons cover signal strength just isn’t what it used to be. Or maybe the covers are signaling that market participants’ exuberance has reached dizzying heights.
The overvalued, overbought, overbullish conditions that you (and others, such as John Hussman) cite have relentlessly continued for at least the past several quarters. It is a very demoralizing time to be a bear. Rationally, I know that this will eventually reverse, but I am absolutely dumbstruck at how long and intense this bull cycle has persisted in the face of such a weak and unsustainable fundamental backdrop.
Yeah, it’s nuts. It’s an historical anomaly for these conditions to be sustained this long. I suppose exuberance is what you would expect at a time like this, and as a bear I’m inclined to say that the duration and degree of bullishness in the face of lousy fundamentals foreshadows a downswing of similar degree.