An old indicator of market sentiment has surfaced again. For many years I have used what I named the Nervous Nellie behavioral gauge. I have received several phone calls from my seasoned clients worried about the market. Everything from let’s lock in capital gains to let’s just get out and get back in next year have been discussed. I am not oblivious to these concerns but my question to the Nellies is what do you see in the future that is giving you this feeling? When you think about it that is a hard question to answer because when you turn off the news and look at the real economy there are a lot more positives than negatives. However what they fear is the fiscal cliff which from my view point is more noise than effect on portfolios.
I was listening to the Presidents news conference today and through the market responded negatively what I heard is more comments about finding common ground. Any solution will spark a rally because what the market is concerned about now is no solution. It is a buyer’s strike waiting for some sort of decision to come forth. The market is suffering from uncertainty not the economy. If it was the economy then why did one of the largest chip makers post the best earnings for the past five years? The fear indicator the VIX is still below 18 when even in normal markets the low twenties is comfortable. For a big crash to come it should be around 30.
The market is sending Obama a loud signal to lead and come to an agreement and the Republicans need to also listen. Mr. President you got reelected to solve problems not create them so do your job.