Technicals point to bull trend for US stocks but bears fear valuations

The S&P 500 rose 0.5 percent last week but John Tobey thinks that “the recent uptrend is not reason enough to be bullish”.

Rather, he thinks that the number of stocks making all-time highs is key.

“The proof is in the performance” is a good guiding principle in this market. A broad number of stocks are rising close to or above their all-time highs and (along with many other stocks) are exhibiting strong technical support signs. Following a year of on-again, off-again bullish/bearish attitudes, it looks like there is rising investor interest, meaning a bullish trend could be taking shape.

John Hussman is not as optimistic. In his latest weekly commentary, he wrote:

At present, Investors Intelligence reports that only 21.7% of investment advisors are bearish, and put/call ratios are severely skewed to the bullish side. The themes cited by bulls feature trend-following considerations and statements like “this chart is bullish.” The themes cited by bears feature value-conscious considerations and statements like “at 38.3%, the value of stocks as a percentage of household financial assets is at the second-highest level in history.” This is a setup that, like 2000 and 2007, cannot help but invite collapse over the completion of the market cycle.