The S&P 500 has been trading in a remarkably narrow range since mid-February between 2040 and 2130. As I’ve noted before, since the start of 2013--when the “fiscal cliff” calamity was averted at the very last minute with a deal struck between Vice President Joe Biden and Senate Majority Leader Mitch McConnell (R-KY)--investors have been impervious to the sorts of anxiety attacks that caused significant corrections during the first four years of the bull market. This year, the major concerns have centered on falling commodity prices, a third bailout plan for Greece, and the meltdown in Chinese stock prices. Yet the market has been Zen-like. This calm has been reflected in the trend of the 52-week average of the Bull/Bear Ratio compiled by Investors Intelligence. It is up from 1.77 at the end of 2012 to 3.36 at the end of July of this year. The series, which starts in 1988, is in record-high territory. That’s because the sentiment survey’s percentage in the correction camp is also at a record high. In other words, when troubles mount, sentiment doesn’t turn bearish. Rather, it turns mildly defensive, betting that any selloff will be just a correction in a bull market. Ironically, that helps to explain why corrections have been missing in action since the start of 2013. Today's Morning Briefing: Zen & the Art of Investing. (1) Stocks are calm despite agitated commodities. (2) Why has the Bull/Bear Ratio been trending higher since 2013? (3) Goldman sees a negative feedback loop. (4) The super-cycle hype. (5) Are commodities really an asset class? (6) From the people who brought us BRICs and the GSCI. (7) The surface is calm. (8) Everything you want to know about “Silk Road.” (9) Potentially lots of positive feedbacks. (10) The Zen of freer trade. (More for subscribers.)Join the conversation about this story »
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