Extreme Bullishness Simply Isn't Justified Right Now

I'm a bit puzzled by complaints that market players aren't properly bullish in view of the positive news flow we have been seeing. My attitude has always been that it isn't the news itself that is important, but rather the way the market reacts to it. When the market struggles on good news, it is a pretty important indication that maybe we have already anticipated the news and have priced it in. Perhaps the market isn't very bright, but you aren't going to win an argument with it.

Many folks, including me, had a very difficult time embracing the summer's rally, so I don't think it is at all surprising that sentiment is still quite negative now that we finally are acting weaker. Folks never loved this market on the way up, so they certainly aren't going to love it on the way back down.

The easiest way to get in trouble in the market is to be too quick to characterize news as "good" or "bad." When Intel (INTC - commentary - Trade Now) reported its earnings a few weeks ago, I don't think anyone would have called that "bad" news, but the market has barely had a positive day since then. Is the market "wrong" in the way it has treating this stock? Perhaps, but I figure I have no special insight, so who am I to argue with the price action?

I'd love to be a wild, raving bull, and if there were a lot of great charts and price action to support that view, then I would be. That isn't the case, so I certainly can understand the rather dour attitude that seems to dominate this site right now. Trying to force bullishness in a market that isn't acting that great isn't a good way to make money.

No positions.

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James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.