The Bears Are Deep in Their Caves

NEW YORK ( FMD Capital Management) -- There is no denying this stock market's resilience over the last year. Every modest pullback is bought in earnest as investors throw caution to the wind, and demonstrate a voracious appetite for stocks. Despite the threats of government gridlock and overseas conflict; plunging commodity prices and an uncertain central bank future, traders have continued to reap the rewards of rising equity prices.

It may not seem logical -- considering the odds stacked against an extension of this rally. However, the stock market is rarely a logical animal. Instead, it is a beast that climbs a wall of worry despite all compelling evidence to the contrary. Don't ever say that the stock market can't go higher, because it can and it will when you least expect it.

This weekend marks the one-year anniversary since the SPDR S&P 500 ETF ( SPY) last fell below its 200-day moving average. The trend has most certainly been our friend over the last 52-weeks. You would have to go back two years on the chart to see this bellwether index having spent more than a week below its long-term moving average.

Courtesy of StockCharts.com

Moves such as these spur the use of buzzwords such as "bubble" and "frothy".

Another interesting fact, brought to my attention by Ryan Detrick of Schaeffer's Investment Research, is that the latest Investors Intelligence Poll now marks the percentage of bears at just 15.5%. According to their research, this is the lowest reading since March 1987 which indicates that the ursine crowd is now in deep hibernation.

For sentiment purposes, a low number of bears typically mean we are close to a market peak. Simply put, if everyone thinks stocks are going up, there is no one left to buy.

However, Detrick is quick to point out in his analysis that the low percentage can persist for quite some time and is nowhere near the all-time historical low. It's a statistic that is worth noting, but hardly an iron-clad reason to go to cash at this point in time. Trying to time a market top can be an exercise in futility.

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