If you’re feeling a sense of crushing ambivalence about the stock market these days you’re not alone according to UBS chart whiz Peter Lee. After coming into the year with too many bulls, many of whom have been shaken out, we’re sitting with a fairly even split between bulls and bears with a growing contingent of those who simply aren’t ready to open their hearts to stocks again.
Well, we’ve been in a “trading range” for about two months and I’m already chewing my leg off in boredom. What on earth is going to shake me out the ennui and make it okay to trade again? It depends on the nature of the overdue bounce according to our guest. Lee sees the recent expansion of bears but we’re still too complacent. “Buyers are fearful the markets are going down (but shorts) are also scared (after a 106% rally in the face of an economy that’s looking more like one continuous dip in terms of a recovery).”
If and when stocks hold support in the 1,220 – 1,250 range on the S&P or breakout above resistance from 1,330 to 1,360 traders will have a chance to come back from the beach and trade either panicked sell-off or a rally into the 1,400’s.
Those of you excited about finally seeing an end to what has already become one of the more boring (near) corrections of recent years need to check that enthusiasm. Lee isn’t expecting the market to break higher in a sustainable way for at least another 5 to 10 years. That’s how long it’s going to take for retail investors to mend the broken hearts incurred by stocks by the bear markets which bookend last decade. “The last stage of grief is acceptance…I don’t believe investors are at the acceptance stage yet,” says Lee.
See the full “Breakout” Video below:
Related ETFs: iShares MSCI Emerging Markets Index (NYSE:EEM), SPDR S&P 500 (NYSE:SPY), Guggenheim Frontier Markets (NYSE:FRN)