Last week, I questioned the conventional wisdom which claimed that there was Not Enough Bullish Sentiment?
It seemed that there were plenty of Bulls who looked at the 15% pullback in the S&P 500 as an ordinary dip-buying opportunity.
In a moderate recession, an 85 day, 15% drop would likely be insufficient to reflect the changes in both growth and earnings -- much less a deeper, more protracted recession.
The counter-argument is that the Fed has flooded so much cash onto the system, the recession no longer matters.
Looking from a sentiment perspective, it's hard to say that the we've seen the sort of fear that typically accompanies a lasting market bottom. There's still plenty of speculative juice around. Consider these headlines from over weekend:
• Barron's: Are You Ready for Dow 20,000 (this year!)
• Vince Farrell on We've Seen Our Bottom
• Barron's cover story: Hitting Bottom? Several Banks and Brokerages Are Ready to Pop Up for Air
• Jim Cramer on An End to the Bear Market? and why this is A Turning Point
• Insiders, at Least, See Reason to Smile
• Just about anything at Forbes.
The closest thing to an admonition of caution was Barron's Technical columnist, Michael Kahn, who called this The Market Bottom That Wasn't.
That doesn't mean we can't see a decent bounce here -- there's lots of liquidity, and as we saw last week, the market stopped going down on bad news. That's usually good for a 5-10-15% counter trend rally. We saw that begin last week.
But Dow 20,000 this year? I highly doubt it...