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MarketWatch First Take
March 10, 2011, 3:14 p.m. EST
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The retreat of the bulls
By MarketWatch
CHAPEL HILL, N.C. (MarketWatch) "” It's always possible that today's triple-digit drop in the Dow /quotes/comstock/10w!i:dji/delayed (DJIA 11,985, -228.48, -1.87%) will be the beginning of a major market decline.
But, if so, it would be surprising from a contrarian point of view. That's because we're not seeing the kind of stubbornly held bullishness that, at least historically, has been the sentiment hallmark of major market tops.
Consider this morning's release of the latest Rasmussen Consumer Index, which measures daily fluctuations in the economic confidence of consumers. The index dropped two points since yesterday morning, and is down an eye-popping 14.5 points over the last month"”and now stands at its lowest level since last September. Read more on the Rasmussen Reports website.
Lest you think that this big of a drop is worrisome, bear in mind that the index hits its lowest level ever in March 2009, just as the bull market was beginning.
Stocks and myriad other so-called "risk" trades are getting hit hard today, with the Dow and S&P 500 being pushed against key support levels. Kristina Peterson, Leslie Josephs and Paul Vigna report.
A similar retreat of the bulls was reported in this morning's release of the latest sentiment survey from the American Association of Individual Investors. That survey, of course, is based on the percentages of the association's membership that report that they are bullish, bearish, or expecting correction. Read the latest results of the sentiment survey.
For the week ending March 9, just 36% of members reported that they are bullish, down more than 15 percentage points from the 51.5% for the week ending Feb. 3.
Stock market timers have also retreated over the last month. The Hulbert Financial Digest reports that the average recommended stock market exposure among short-term timers is now 49.1%, down more than 9 percentage points over the last month.
If this bull market follows the historical pattern, the initial market decline from its final top will be accompanied by disbelief "” by arguments that the drop is a great opportunity to load up on even more stocks.
That's not what we're seeing today.
--Mark Hulbert
It would be surprising from a contrarian point of view if a major market decline were beginning, since we're not seeing the kind of stubbornly held bullishness that has been the hallmark of major market tops, writes Mark Hulbert.
3:15 p.m. March 10, 2011
"Japan's quake death toll climbs to 32: reports http://on.mktw.net/esuMP2" 6:06 a.m. EST, March 11, 2011 from MarketWatch
"Tsunami warnings extend to large parts of the West Coast of the U.S. from Alaska to Calif. http://on.mktw.net/gOWmFx" 5:04 a.m. EST, March 11, 2011 from MarketWatch
"Hawaii begins to evacuate coastal areas in expectation of severe tsunami: reports say http://on.mktw.net/ehDw46" 3:50 a.m. EST, March 11, 2011 from MarketWatch
"Reinsurance stocks decline in Europe following news of Japan earthquake, tsunami http://on.mktw.net/gmwg6O" 3:18 a.m. EST, March 11, 2011 from MarketWatch
"U.S. Geological Survey data indicate magnitude 8.9 earthquake in Japan is worst on record http://on.mktw.net/dH81gJ" 2:34 a.m. EST, March 11, 2011 from MarketWatch
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