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When Even Bears Act Bullishly (What It May Mean)

“Some indicators are making records”

by Bob Stokes
Updated: November 18, 2021

It's difficult for most investors to take an independent stand from the crowd.

For example, it may be wise to "buy when there's blood in the streets," as Baron Rothschild famously said, but for many investors, that's easier said than done.

Likewise, when a financial uptrend has persisted, it's difficult for many investors to act in a contrary way to the pervasive optimism.

Consider this chart and commentary from our November Elliott Wave Financial Forecast:

naaim-full

The chart shows the exposure to equities held by members of the National Association of Active Investment Managers. Readings above 100 mean that managers are leveraged long equities [and] this week's reading [is] 107.99%... Some indicators are making records. The bottom graph on the chart shows the equity exposure of the most bearish fund managers. Yes, even the bears are bullish. For the past three weeks, the most bearish fund managers were still net-long stocks by 50%, 65% and 50%. It's the first time in the history of the data... that bearish fund managers have been net-long equities 50% or more for three consecutive weeks.

Here are three headlines which speak to the persistent bullish sentiment:

  • Stocks Are Still the Place to Be, Our Exclusive Big Money Poll Finds (Barron's, Oct. 16)
  • Invesco records fifth straight quarter of net inflows (Pensions & Investments, Oct. 26)
  • Fund managers make their biggest bets on U.S. stocks in 8 years... (Marketwatch, Nov. 16)

The takeaway is that when almost everyone acts bullishly, even the most bearish, there's relatively few investors left to buy to keep an uptrend going.

This doesn't mean that the financial uptrend will stop, say, tomorrow or the next day.

However, it does suggest that an investor will want to pay particularly close attention to the message of the Elliott wave model, which offers high-confidence insights into market turn junctures.

Follow the link below to get those Elliott wave insights now.

Big Stock Market Pattern ALERT

Imagine a long and twisting river with major tributaries that fork into smaller branches.

And, the smaller branches of water resemble the major tributaries. Then in turn, the major tributaries look like miniatures of the river itself.

"Fractals" are visible in nature and elsewhere, including the stock market.

Without a timeline (and Elliott Wave labels), you can't tell the difference between a daily, weekly, monthly or yearly price chart. They all look similar. The same patterns unfold repeatedly.

Right now, Elliott Wave International analysts are focused like a laser beam on the stock market's BIG pattern -- the river, if you will.

Our Elliott wave experts see a huge story developing -- nay, a historic story unfolding at this very moment.

Prepare by reading our latest analysis and learn what our team of analysts expect next for stocks.

Simply follow the link below.

Financial Forecast Service

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All month long, Financial Forecast Service helps you stay ahead of the waves in the U.S. markets on the timeframes that matter the most. FFS covers the stock indexes, bonds, gold, silver, the U.S. dollar, as well as market psychology and cultural trends. It is our most popular service.

Comprises the monthly Elliott Wave Financial Forecast, 3x-per-week Short Term Update and at least 12x-per-year Elliott Wave Theorist.

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