Bullishness at Highest Level Since 1992
Optimism about U.S. stocks has risen to its highest level in almost seven years, nearing the point some technical analysts believe could signal at least a modest pullback in the market.
A weekly poll of investment newsletter writers and other independent investment advisors by Investors Intelligence of New Rochelle, N.Y., shows that the percentage of advisors who considered themselves bullish, or optimistic, about stocks rose to 58.3% last week from 57.1% the previous week.
Optimism hasn’t been this high since the indicator reached 60% on Jan. 17, 1992.
“If this goes above 60%, I think it’s a bigger concern,” said Bob Dickey, a technical analyst at Dain Rauscher Wessels in Minneapolis.
Technical analysts, who try to predict the market based on past performance rather than company fundamentals such as profit potential, say an extremely high level of optimism suggests investors may have little cash left to invest and propel stocks higher.
Conversely, when pessimists significantly outnumber optimists among the pros, stocks may be poised to rise because the implication is that investors are hoarding cash that will eventually pour into the market.
The last time optimism reached 60%, it signaled the end of a 12% rise in the Standard & Poor’s 500 index that brought the benchmark to 420.77 on Jan. 15, 1992. The index then fell 6% over the next 12 weeks.
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Hottest of the Hot
The lists of 1999’s top 10 performers so far on the New York Stock Exchange and Nasdaq include several steel, telecommunications and semiconductor companies. Stocks priced under $5 and those with light trading volume are excluded. Top gainers from the close of trading Dec. 31 through Wednesday:
BEST NYSE PERFORMERS
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Ticker Wed. YTD* Stock symbol close gain National Steel Class B NS 10.19 43.0% Gucci Group GUC 68.63 41.1 Huntco Class A HCO 5.44 40.3 Unisource Worldwide UWW 10.06 38.8 LTV LTV 7.81 35.8 Sensormatic Electronics SRM 9.38 35.1 Trump Hotel & Casino Resorts DJT 5.06 35.0 Rostelecom Long Distance ADR ROS 5.56 32.8 Westcorp WES 9.00 29.7 MarineMax HZO 10.13 28.6
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BEST NASDAQ PERFORMERS
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Ticker Wed. YTD* Stock symbol close gain AvTel Communications AVCO 6.75 80.0% Hungarian Broadcasting HBCO 5.81 78.9 Pegasystems PEGAE 7.13 71.4 HTE HTEI 8.44 68.8 Lam Research LRCX 27.13 52.3 Zygo ZIGO 12.81 48.6 ASM Lithography ASMLF 45.00 47.5 Cumetrix CDSC 6.25 47.0 Genisys Reservation GENS 6.00 45.5 Samsonite SAMC 8.00 43.8
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* year-to-date Source: Telescan
