It is anyone's guess where we go from here, and there are plenty of guessers hard at it. The majority of guesses I see lately are increasingly pessimistic. And that may be right. I asked an audience at a conference Sunday for a show of hands as to who felt optimistic about the stock market over the next 12 months. 5 out of about 300 raised their hands. Two years ago, this question saw most in the audience with their hands up. In the past I have found that this question tends to be a good contrarion indicator at turning points.
Logic breaks down for me when commentators start pointing to the stock market declines in the past 6 weeks as a good predictor of what the future holds. The thing is 18 months ago markets were at all time highs around the world. Was that the market's best prediction of present times? Then that argument falls flat. Markets did a horrible job of seeing the present mess coming. The fact I have known for many years is that markets aren't omniscient or rational; they represent herd think and a collective vote born of human behaviour and emotional reasoning. The behavioral science concept of the ‘recency effect’ states that humans most typically see the same ahead as what we have seen in our recent past. So in a bull market, we see more bull, in a bear market we see more of the bear. This is the human nature that we have to fight in order to keep thinking and measuring…
Today Obama made an awkward attempt at being bullish. This was no doubt in response to recent criticism that he is not caring enough or talking enough to the stock market. Tonight on Fast Money Oppenheimer Technical Analyst Carter Worth showed show positive trends in some of the charts on Copper, Oil, and potentially the stock market. We have noted these exact trends and potential support in our technical work at my firm recently. Will these trends hold? No way to tell. But they may. These less dire interviews are in short supply right now so it is worth a watch, especially for those feeling completely dark.
Cory’s Chart Corner
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