Greg Guenthner

You’re getting lazy. Complacent.

You think you have the market all figured out. The past couple of years have lulled you to sleep. That’s why you’re ready for the spring correction to pull into the station as the first quarter draws to a close.

I get where you’re coming from. For three years in a row, the market has started out hot. But it didn’t stay that way…

In 2011, the S&P peaked in late April, crashed in August, and dragged itself off its lows to finish the year. 2012 had a much different summer and fall — but the story started off the same. Stocks were up early, peaked in April, then gave back much of the gains posted during the first three months of trading.

Futures are off a bit this morning. Europe isn’t looking good at all. And the top-callers are out in full force. Everyone — I mean everyone — is expecting stocks to fall hard. Usually, when too many investors think we’re headed for a correction, the market proves them wrong.

That makes me think this rally has some more room to run…

“When too many investors are looking for a correction, it reflects that selling has already occurred,” explains Barry Ritholtz. “That implies less supply, less downside pressure, and the potential for pros to be forced back in. It is the long-only side version of a short squeeze.”

Here’s the visual:

Investor Inteligence Percent Correction

Top-calling the market has become America’s favorite spectator sport this year. But if you’re keeping score, everyone’s batting .000 so far.

Don’t fall into the trap. Yes, there’s a ton of conflicting data out there. But that’s no reason to pull the plug on this market without some confirmation from the major indexes. Stick with stocks until an actual sell signal materializes.

Greg Guenthner
for The Daily Reckoning

Greg Guenthner

Greg Guenthner, CMT, is the managing editor of The Rude Awakening. Greg is a member of the Market Technicians Association and holds the Chartered Market Technician designation.

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