When the shoe shine boy is telling you what to invest in, you know you are near a top. The attitude at important market tops is always buy and hold forever. It ought to be tighten your stops and lighten up. The attitude at important bottoms is avoid the market at all costs, when it ought to be load up the truck. Confidence is extreme at tops.
Fear is extreme at bottoms.
Over the last few years this market has been attracting money not because it has offered great value, but because it has had tremendous momentum and momentum attracts attention and money. The highs were also made as the broader averages such as the Russell 2000 failed to corroborate those highs, indicating underlying technical weakness in the broader market. Since that time we have seen several days with a negative advance decline of ten to one. In August there were only five days that closed with more advancers than decliners and this includes the eight up days for the month. The rebounds to the upside have occurred with very little vigor and to our mind this suggests that things are not as they have been over the last several years.