It seems one can’t really look anywhere these days without seeing an article or a pundit decrying the fact that the market “hasn’t had a 1% correction in 87 days,” that the Volatility Index (a.k.a. “the VIX”), or that bullish sentiment has reached extremes. Currently, the Investor’s Intelligence survey shows that 62.7% of investment advisers are bullish vs. a scant 16.7% of whom are bears.
That’s enough to make “over-experienced” investors run for the proverbial hills! That is, unless they rely on the specific price/volume action of individual stocks more than they rely on various sentiment statistics. So I’ll pass on the statistics, thank you, and take a healthy serving of real-time price/volume action in individual stocks as my market barometer. There is no other way to operate in this market than on the basis of the real-time set-ups in individual stocks.
And as I discussed in my Wednesday mid-week report, the set-ups remain predominantly bullish. In addition, my own short forays on the short side have yielded nothing more than brief scalps. That, in and of itself, is valuable visceral information that helps me push to the right side of the market in force and in time to reap the benefits.
An example of a short scalp that yields some quick profits before the Ugly Duckling Principle is invoked is Caterpillar (CAT). I wrote on Wednesday that after breaking down in what looked like a shortable base-breakout failure, the stock was at that time in position to pull an undercut & rally move and was likely to rally from that point, despite the fact that it had just failed on a recent base breakout.