Some More Thoughts on Long Term Sentiment

Cullen Roche has a good post up discussing the lack of bearish sentiment in the market right now: Where Did All the Bears Go?. And I think this is right on track. This recent wave up has been a real bear killer combined with the fact that the Dow Industrials are at a new all time high.

This is yet another reason why I don't think the end of this wave will be 'the top'.

As I have said many times over the past couple of years now, we need to see some serious internal divergences take shape to even begin to consider that we have seen the top. And so far, absolutely none of them have manifested: http://marketthoughtsandanalysis.blogspot.com/2013/01/update-on-long-term-projection-011913.html.

So this chart caught my attention and is telling the same story that I have been saying. If you indulge me in some interpretation, which I lay out below:

I think we are still somewhere in 'Phase 2': sentiment has shifted and the investor community is seeing this bull market as a bull market.

Now we could be at the end of Phase 2. But even if that were the case we should still expect another leg up to make a higher high after the next correction to show a divergence in sentiment. We would also need to see confirming divergences in a number of other internal indicators.

So in short, I am still not expecting the market to have peaked with this peak.