What makes me think under-invested portfolio managers could keep the market buoyant into yearend? The following quote comes from Jeffrey Saut, Chief Investment Strategist at Raymond James:
Net long positions at professional money management firms remain in the 50–60% range, which is well below the 70–75% level reached at the October 2007 peak. That suggests the upside should continue to be favored into year-end as the under-invested portfolio managers chase stocks driven by performance pressure, bonus pressure, and ultimately job pressure.
As a top technician, I have no reason to doubt Mr. Saut's statistics. Under-invested or not, I will continue to focus foremost on the underlying trend. This is merely anecdotal evidence that supports the current uptrend. It is kind of like seasonality and cycles. Bullish seasonality doesn't make the uptrend. It simply enhances the uptrend.
Net long positions at professional money management firms remain in the 50–60% range, which is well below the 70–75% level reached at the October 2007 peak. That suggests the upside should continue to be favored into year-end as the under-invested portfolio managers chase stocks driven by performance pressure, bonus pressure, and ultimately job pressure.
As a top technician, I have no reason to doubt Mr. Saut's statistics. Under-invested or not, I will continue to focus foremost on the underlying trend. This is merely anecdotal evidence that supports the current uptrend. It is kind of like seasonality and cycles. Bullish seasonality doesn't make the uptrend. It simply enhances the uptrend.
About the author:
Arthur Hill, CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London.
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