SELL-SIDE STRATEGISTS COOLING OFF TO STOCKS. GOOD!

In what may be the most encouraging piece of news I've seen this week, Bespoke Investment Group reports that market strategists on the sell-side have (as measured by their recommended equity allocation) turned decidedly more bearish lately. Their current average recommended equity weighting is just 57%, at the low end of a 15-year range of between 50% and 75%, and sharply lower from where it was at the end of 2011. The data comes from a weekly survey conducted by Bloomberg. Here is the long-term data. It is exactly the sort of contrary indicator you would expect: Duh! Since strategists also happen to be humans, they do what humans tend to do: love equities near market tops and then hate them near market bottoms. That they are underweighting equities at the margin now, in the face of the market's continued rise, is yet another sign that the wall of worry is still solidly in place. . . .

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In what maybe the most encouraging piece of news I’ve seen this week, Bespoke Investment Group reports that market strategists onthe sell-side have (as measured by their recommended equity allocation) turneddecidedly more bearish lately. Their current average recommended equityweighting is just 57%, at the low end of a 15-year range of between 50% and 75%,and sharply lower from where it was even at the end of 2011. The data comes from aweekly survey conducted by Bloomberg. Here is the long-term data. It is exactlythe sort of contrary indicator you would expect:

Duh! Since strategistsalso happen to be humans, they do what humans tend to do: love equities nearmarket tops (January of 2001, say) and then hate them near market bottoms (March, 2009). That they areunderweighting equities at the margin now, in the face of the market’s continuedrise, is yet another sign that the wall of worry is still solidly in place. Bullish. . .