Here is a quick recap of what’s happened so far this year:

January started with a 10% correction and many potential investors I spoke to were borderline suicidal. That’s not an exaggeration. They couldn’t sleep, they couldn’t eat, and many cashed out near the lows. I think their emotional reaction was due to a market that has seen little volatility from 2013-2015. Therefore, when a quick 10% correction occurred, it felt worse than it really was. By mid-February, many sentiment measures were showing extreme bearishness, worse than in 2003 and 2009. I could write a book about this, but let’s move on. We rallied back over the next 5 weeks for many reasons such as: oil stabilizing, economic data showing the US was not heading into a recession, and the Fed getting back in sync with the other Central Banks.

Fast Forward to the present: Everyone still hates this market. Many market participants are scared, apathetic, underinvested and short. Here are a few examples:

1) I spoke to many potential investors around mid to late February, telling them I was getting back in the market. 100% of them were still scared. Now when I talk to them, they say “no way am I going to jump in at these levels!” Hey, sometimes you just can’t help people.

2) Let’s move on to the institutional people I talk to who manage $2B or more in assets. Many are still underinvested, and some have the biggest net-short positions they’ve ever had.

3) When looking at the major Wall Street strategists, the average 2016 year-end S&P 500 target is 2150. That’s only +5.5% away. So, when I say “No One Is Bullish,” I mean almost no one is calling for a +10-20% gain from here.

Bottom line, this isn’t a market call, this is simply an observation. It feels like the pain trade would be to the upside. It doesn’t mean we go to Dow 20,000 tomorrow, but it could mean we eventually grind higher to frustrate people. Of course the obvious question is: What will cause the markets to go higher? It could be one simple reason: Because no one is expecting it and the market tends to fool the majority. In addition, the market loves to embarrass underinvested money managers, especially the ones who are short. Oh yeah, and a dovish Fed who is most likely frozen until after the election doesn’t hurt the market either.

Again, this isn’t a market call, these are simply my observations. It feels like there’s too much doom and gloom right now and the thought of Dow 20,000 this year BLOWS people’s minds away. Good luck trading!

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