Bullishness rises, and that’s bad news for the rally.
I’ve been away in New Orleans for a few days, and my email are stuffed with more optimistic commentary from traders-about Bernanke’s testimony, about better economic news.
The message seems to be that recovery is coming sooner than expected.
If true, that is good news, but rising bullishness is usually bad news for rallies, particularly a rally with as much “oomph” as this one: the S&P 500 is up 34 percent off its March 9th bottom.
The best thing the rally had going for it was the high level of bearishness: most professional traders remained convinced that there was another leg down this summer.
But that has been changing since last week, and yesterday’s late-day meltup is causing more traders to throw in the towel.
– Bob Pisani, “What’s Really Bad News For The Rally?”, Trader Talk, May 5