Tuesday, May 08, 2012

S&P Below 1360!

This is the most bearish stock market predictive moment that I've seen in many months, if not years. Short-term investors are relatively optimistic right now, and an example of this optimism is the lack of a blaring headline on Drudge Report, despite a two-month low in the stock market. Sentiment is a contrary indicator, so this optimism is bearish. In addition, volatility has leveled off at a relatively low level for the past few months, and that often occurs at market tops. I've already helped myself to some shares of the AdvisorShares Active Bear ETF (HDGE), but I'll be more confident about this bearish forecast if the S&P 500 finishes the day at 1350 or below. (It's trading at 1350 at 11:30 AM, and it could still rally back above 1360 before the market closes.)

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