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Bullish on the Stock Market
Pinnacle Digest writes: In his latest article, Gary Tanashian explains why he is bullish on the stock market heading into August.
Tanashian explains that Wall Street dealers are clinging to T Bonds in fear of a deflationary armageddon. Commercial bond traders appear to be of the same mindset. And finally, the large speculators and little guys are full on bullish for bonds.
This is a classic scenario for an overbought sector and ‘dumb money’ indicators suggest getting long equities soon (doing the opposite of the ‘dumb money’).
Tanashian writes “The public is rabid for Uncle Sam's debt. How convenient. In fact, in reference to the previous post, isn't it amazing how the system seems to be geared toward always having the public set up on the wrong side of things? Yes, they will be right as long as the mature trend holds, but the public is due to be very wrong when this trend changes; and change it will.”
Tanashian explains that he is bullish on the markets for the second half of 2012, pending what he expects to be a choppy July. Tanashian’s reasons for his market optimism are the overwhelming T Bond allocation and the fact that we are in a Presidential cycle. Tanashian believes that investors have given up on the equity markets (given the allocation to T Bonds) and this typically preludes and stock market rally.
Click here to read his full article.