New Yorkers have a love-hate relationship with crowds. We like a little bustle in our cities, but we think Times Square on New Year’s Eve, Rockefeller Center at Christmas, or spectacle restaurants on Saturday nights are for tourists and amateurs. So while my 401(k) plan and I are happier these days, the throngs gathering to cheer the market’s melt-up are making me a little uneasy.
There’s much to like about the stock market, but the new group hug isn’t one of them. Despite one bad apple — quite literally, the new rot in Apple’s (ticker: AAPL) shares — large stocks have rallied five of the past six weeks, and small stocks nine of the past 10. The quickest January start since 1987 has lifted the Dow Jones Industrial Average to a five-year peak, while a 20% gain in just 10 weeks has sherpaed the Dow Jones Transportation Average to an all-time high. The Standard & Poor’s 500 hasn’t suffered the indignity of a 10% correction in 480 days — not nearly as long as the 1,673-day lull between 2003 and 2007, but already the 10th-longest ever, says Bespoke Investment Group.
Just like that, the horde of bullish investors has swelled to 52%, the most in two years and double the herd just six months ago. The mood swing is understandable: After all our brooding about fiscal calamity, even half measures — a three-month extension of the U.S. debt ceiling, a postponement of the budget tussle — can feel like reprieve. Against lowered expectations, the 5.2% uptick in fourth-quarter revenues that companies are now reporting, and the 7.7% profit increase, can seem like causes for celebration. As a result, nine out of 10 stocks today are levitating above their 50-day averages, a sign the market is becoming overbought in the short term.
Read More at Barrons . By Kopin Tan .