) -- I'm bullish right now. In fact,
I've made it no secret
that I'm very bullish on U.S. stocks, and I have been for a while now.
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Thing is, since calling the end of the market correction in late June, I've been right too. As I write, Mr. Market is up around 20% from that mid-summer low in the
. But I'm not writing this column today to pat myself on the back.
I'm writing it because what if I'm wrong from here?
As an investor, when you're right for too long, it's critical to question your investment thesis. After all, as market legend Ned Davis is fond of saying, "There's a difference between being right and making money." That's why today I'm going to play the devil's advocate and take a look at four reasons not to buy stocks in 2013.
(If you missed the original "
4 Reasons to Buy Stocks in 2013," read it now.
1. The Market's Internals Are Weak
One of the biggest criticisms that's been floating around of late has been the concern that market internals are weak -- but quite frankly, that's a cop-out. Saying that "internals are weak" is an easy way of sounding smart without actually needing to back it up with actual metrics. (Ironically, a Google search of the phrase "weak market internals" mostly brings up results from mid-2009. We all know how that played out.)
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indicators such as the advance-decline line, it's clear that market internals are actually confirming the new high-water marks being put in by the S&P right now.
The climbing A/D line means that most stocks are participating in the rally -- it's not merely being led by a few mega-cap leaders. That's a sign of market strength.
I think a more convincing red flag comes from Wall Street strategists right now; more and more equity folks at big banks are finally turning bullish, a signal that the contrarian extremes in hatred for the market are starting to unwind. That's not a good thing for stocks necessarily, however. When
gets bullish on stocks, it's historically a sign that the rally has run its course.