A new issue of Robert Prechter's The Elliott Wave Theorist came out this weekend with some striking facts about current market sentiment:
(1) Mutual fund cash holdings are at a record low of 3.4%;My own observation is of a massive wave of commentators on CNBC banging the table for bargain stocks and pee-in-their-pants bullish forecasts for the S&P six months out.
(2) The DJIA annual dividend yield is at 2.7%, lower then it was in 1929. The S&P dividend yield is at 2.1%, right where it was at the 2000 and 2007 market tops;
(3) The Daily Sentiment Index, a shorter-term indicator, is at 83% bulls.
We trade the dominant trend around here, which not surprisingly has been UP. But it is important to keep an eye on the bigger picture and befriend caution from time to time. This may be one of those times.