Stock Market Analysis: Time To Secure Profits?

In spite of record high optimism, several technical indicators signals that the stock markets may be at a top. Perhaps it’s time to secure profits and take an early Easter vacation?

“In the investor community, however, pessimism is at a dangerous low level at the moment.”

Terra Markets


Are there too few pessimists in the U.S.? Not among U.S. households if we are to judge by opinion polls as Consumer Confidence. In the investor community, however, pessimism is at a dangerous low level at the moment, the Norwegian brokerage firm Terra Markets points out.

According to the AAII weekly poll is only 25% of U.S. investors have a negative market view.

“Historically, a pessimist level of 25% or less often coincided with, at least short-term,  market stops and notified in corrections,” Terra Markets point out in their daily note to clients Friday.

Other technical indicators sends the same message.

For example, if you look at the bull/bear-relation on the Dow, the optimist are still pretty much  in majority:

The picture is even clearer when you look at the broader S&P’s 500:

But if you check out the Relative Strength Index, it seems like the U.S. stock market is about to become overbought.

RSI, Dow Jones:

Again, the pattern is more visible looking at S&P’s 500:

The tech’s for Europe is exactly the same.

Maybe it’s time to make some profit and take an early Easter holiday?

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