Is there anyone left that actually looks at the fundamentals?  Or has everyone become  a market historian, screaming BUY after a rally, and SELL after a selloff?  According to this Marketwatch study,  it appears that all the newsletters in the land have jumped in to declare the bottom.

To give you an idea how quickly this emerging consensus has been formed, consider the Hulbert Stock Newsletter Sentiment Index (HSNSI). This index represents the average recommended stock market exposure among a subset of short-term stock market timing newsletters tracked by the Hulbert Financial Digest.

On Nov. 20, HSNSI closed at minus 18.9%, which meant at that time that the editor of the average short-term market timing newsletter was recommending that his clients allocate 18.9% of their equity portfolios to shorting stocks. As of Tuesday night, in contrast, the HSNSI stood at 43.5%, or 62.4 percentage points higher.

But the fundamentals of almost every sector are still waning.  Perhaps it is the quantitative easing and forecasted $1 trillion 2009 deficit that everyone is so excited about?  Or maybe it was the 693,000 jobs lost in December?  Surely those unemployment checks will incite mass purchasing at local malls everywhere?!?!

As for me, I maintain my neutral stance on the markets.

  • I will hedge nearly everything I buy.
  • I will maintain some cash on the sidelines.
  • I will take both long and short positions.
  • I will remain skeptical of all these bulls who continue to ignore the fundamentals.
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