Richard Russell said in a casual interview last Friday:
Consider the following — pessimism has now enveloped almost the entire nation. Estimates of home foreclosures are running into the millions of units. The American consumer is buried in debt and stranded with little or no savings. Manufacturing is slowing down in the US. Leading analysts are competing with each other with bearish forecasts. People are calling the Fed impotent or even helpless in the face of the enormity of the problems we face. On top of everything else, the unfunded liabilities in Medicare and Social Security are running into the multi-trillions of dollars. The presidential candidates do not even want to talk about the nation’s potential liabilities. And on top of everything else, we’re mired in one of the longest and most expensive wars in US history.
Yet slowly, almost imperceptibly, the major stock averages have been building huge bases. Since January 22, the majority of stocks have stopped going down — in fact, they’ve been rising.
Dan Dorfman at The New York Sun wrote last Friday as well:
I rang up TrimTabs Investment Research, a well-regarded West Coast-based liquidity tracker with a substantial hedge fund following in which Goldman Sachs holds a minority interest.
Why TrimTabs? Because last October, its CEO, Charles Biderman, a former Barron’s reporter who has been a bull since early 2004, threw in the towel and turned bearish. It was perfect market timing, as it coincided with the recent market high, and averages since then have skidded about 13%.
He has just switched gears once again, taking a sunny view of the market based on record bearish sentiment (usually a good contrary indicator), tremendous cash on the sidelines, and signs the economy is beginning to pull out of its six-month slump.
To Mr. Biderman, it all suggests “we’ll see an explosive rally in the next couple of weeks.”
