For the individual investor, bullishness peaked just two weeks after the election at 49.9%. And since then, it’s drifted until the past week when it actually plunged almost 7%. The market covered a lot of ground in a short period of time, but there was never a sense of irrational exuberance. In fact, one would have to go back 107 weeks to find the last time bullishness was above 50%- just three weeks shy of the all-time record.

This sense of cautiousness underscores why so many investors missed out on the stock market rally that began in March 2009. It also suggests a more disciplined individual investor. Still, investors are beginning to warm up as bullishness has been north of 40% for nine consecutive weeks.  

My concern is that individual investors have a habit of blinking just at the moment they begin to feel too confident. A case in point: back in January 2013, the Dow Jones Industrial average was charging toward a new all-time high, and bullishness stood at 52%. The index smashed through its resistance and began a two-year non-stop rally, but it had plunged to just 28% at the end of March’s bullishness.

This same script has played out over and over throughout history.

There may be a psychological aspect to all of this such as Lucy pulling the ball back as Charlie Brown gets ready to kick. No one wants to feel like a chump. By the same token, there is also a sense of manipulation involved in this as well, and there is no doubt that big Wall Street money likes to ride these waves long before encouraging the masses.   

I know it is tough ignoring the Street telling you to sell the inauguration, ignoring the angst that comes with market rallies because it’s time to build a portfolio. 

Several Trains Pulling Out of the Station

Meanwhile, there are more signs that the U.S. economy is ready to take off like a rocket, which comes from the Philadelphia Federal Reserve Manufacturing Report. This saw all facets of the report rising sharply higher month - to - month with general activity clocking in at its highest level since November 2014:

 

• General Activity -26.0 from 14.9
• New Orders - 23.6 from 19.7
• Employees - 12.8 from 3.6

While there is a renewed focus/angst with respect to inflation, I think it’s a good thing that manufacturers were able to raise prices received to keep pace with prices paid.

• Prices Paid -  $31.5 from $28.1
• Prices Received -26.8 from 8.0

Looking Ahead

The Six-Month read on general activity climbed to 56.6 from 48.7 in December.  Highlights:

• 67%  Expect increases in activity
• 43%  Expect increases in employment (as it was just 15% in December)

Consequently, for the first quarter, 62.5% of polled firms planned to increase production in the first quarter, and many will achieve this by hiring additional workers.

It’s Trump’s Turn

Well, this is the day many have been waiting for years – the changing of the guard. President Donald Trump will have a lot of room to push his agenda that should awaken a sleepy, self-loathing nation, and return a sense of pride to a lot of people who were left behind in an economy that actually stopped delivering even before Barack Obama took office.

This is a very exciting moment, and I hope it will be a transition back to American basics that rekindle dreams and more importantly, the belief in each person that they can make those dreams come true.

Comments

Hopeful...wrong word for me. "Awesomeness". Because I know "All is Well". Our Lives changed the minute he won the Republican Nominee. God answered my Prayer. I know we are on a positive path for all. 'Division is on its way out'. We will be one. Spunky on 1/20/2017 10:08:14 AM

I'm very hopeful that economic and regulatory reforms will allow our economic engine to thrive. Too many millenials don't remember great economy and accessible job market, hence the push towards socialism. kev on 1/20/2017 10:12:04 AM

I'm hopeful, but there are negatives that must be overcome before we can build a better, never mind make it "Great Again." Here's why: 1. The resistance of the Democrats will be enormous. 2. Technology will remain a net drag on jobs. 3. Demographics remains a negative. Abortions are declining, but so are births because of the echo effect of 60 million past abortions. 4. They represent 18.5% of our whole economy and a cumulative $55 trillion in lost GDP that can't be made up. 5. The moral and social decline we've experienced, especially in our cities, represents a real cost. And 6. No magic wand exists to compensate for all of this. It will take lots of ingenuity plus blood, sweat and tears before Trump's dream can be realized. Meanwhile, the left will resist this every step of the way. He needs our prayers and active support. And I speak as a former lifelong Democrat. Dennis Howard on 1/20/2017 10:33:12 AM

Very Hopeful. Happiest day in a long, long time. Joan D on 1/20/2017 12:45:09 PM

Thee was a time a few decades ago when a candidate for president ran on a theme similar to the one Donald J. Trump has used : America First! He was a Democrat who later founded the American Independent Party because of a lack of support for his campaign platform: Stop ALL foreign aid and spend those dollars here at home. He was rejected by voters more than likely due to his past affiliations, but it is MOST interesting how this "political theme" has once again resurfaced (under "Make America Great Again") and ushered in an new, national administration and a 45th President of the United States committed to achieving the goals set forth many years ago under a populist by the name of Alabama Governor George C. Wallace. I voted for BOTH men and hope and PRAY we will FINALLY see the end results each forecast to achieve. God Bless AMERICA and God's Speed, Presidnent Trump!! James Warlin on 1/20/2017 12:55:02 PM

I saw an old black and white movie that refers this recently - think it was Gerald L. K. Smith. Did research seems like the general consensus was he was anti-Semitic but there isn't a lot of hard research on him. I would say we should have a distinction between America First and America isolated from global trade and involvement. Great Empires that became insular eventually crumbled (China in 1800s and Shogun Japan) as the world passed them by. Yes, time to do more for our citizens but most stay engaged with world. I'm very hopeful. CP Charles Payne on 1/20/2017 1:00:30 PM

I am emotional and profoundly optimistic. It is now President Trump's opportunity to lead our bloated government to balance, our country to properity, and our divided country to harmony. Judy Warfield on 1/20/2017 1:09:07 PM

yes i think that we can get the country on the right track again now under the thumb of Obama and the Democrats is over farrell on 1/20/2017 2:35:19 PM

Americans fortunes will climb, but it will be against an opposition that will be loud,violent and deceitful. E.V. Wagoner on 1/20/2017 3:35:57 PM

I'm very hopeful!!! I too believe the LORD had a hand in this resurection of our Country, just like HE did w/ the Founding Fathers. Wish like hell the damn LIB's would just go away...I will never understand how ANYBODY can think that way!! Why can't they work together for the good of the USA Why do the DEMs have to be obstructionist. GunnyNam69 on 1/20/2017 3:59:49 PM

Absolutely counting on it - the choice is either asserting leadership or being trampled under by the stampede. Patricia Flynn on 1/20/2017 4:33:26 PM

I am not only hopeful but I am intuitively certain this man will do what he said he woulld. Somehow it just feels right. Jeanine Amato on 1/20/2017 5:52:27 PM

Fortunes improve? Become greater? These are easy answers, we are in such sad shape that any step in the right direction is sure to bring some improvement. The bigger question is will we prosper and become great again? Much harder to answer. After 50 years of asinine decisions by a Supreme Court controlled by traitors who hate the US Constitution who reigned without the benefit of checks and balances on the judiciary? And then we have the past 3-5 years where the checks and balances of the 3 branches of government were stripped from the executive branch under the deceitful eye of a traitorous pack of Democrats in Congress who also hate the US Constitution (and allowed by an impotent pack of cowardly Republicans). So our Constitutional government structure has been dismantled by a minority who hated the American culture and way of life and sought to replace it by duping the people, who fell for their lies. Now that the people have bought into inane lies about our cultural heritage, how does one man reverse all that destruction and rebuild a society? That is certainly a tough question to answer. Bob G on 1/21/2017 1:18:55 AM

Very very hopeful. Cliff Blackstock on 1/22/2017 9:13:08 AM

Very Optimistic! About the future, our economy, lots more jobs & a Military stronger than ever. TOM HOLCOMB on 1/24/2017 1:52:04 PM

What does it suggest when we see President Trump doing exactly what he said he would and at lighting speed from day 1.He has done more to date than most Presidents do in there whole time in office.Suggestion,the others are only there for the fame and finance and just go along with the program no matter what.The others were the appointments of a rigged system. victor on 1/25/2017 7:39:29 PM

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