Do You Care that the U.S. Equity Market Continues to March Higher?

There has been a disconnect.  Individual investors don't seem to care that the market continues to rally.

Here is a chart showing continued investor out-flows, even as the Dow Jones Industrial Average hits multi-year highs.

 

120304 Investor Confidence Disconnect  

History seems to be on the Bulls' side.  Here is a Bespoke chart showing what has happened after the S&P 500 Index rallies 15% (or more) in a three-month period.

 

 

120305 SPX Performance After 15 Percent Rally in Three Months

 

It has been a pretty bullish indicator.

Moreover, sentiment is not not so frothy since the rally has been so widely ignored by individual investors.  As a result, traders don't expect much panic-selling on a move down.

In addition, the Markets have been resilient through some scary news cycles recently. 

The question is: can it continue? 

Well, if the Market can't shake-out some sellers, the next surprise could very well be another move higher.

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