Monday, February 14, 2011

Now, the Contrarian View

Just about every financial pundit in America, it seems, thinks that the stock market is poised to have a big year in 2011 - Bloomberg News' survey of economists reached a consensus increase of 11 percent for the S&P 500, while Goldman Sachs' leading market prognosticator threw out an estimated rise of 17 percent. It's kind of refreshing, then, that a firm called United-ICAP is willing to throw a little bit of cold water on all that exuberance.

United-ICAP, which calls itself a technical-advisory service, points out that 65 percent of all retail investors have declared themselves bullish on stocks. Individual investors are generally the last group to jump on market trends, so their optimism could be a sign that we're reaching a market top. The firm also thinks that having so many market watchers predicting a big year is a bad signal in and of itself.

For its own part, United-ICAP is predicting that the S&P 500 will end the year somewhere between 1,291 and 1,380 - which would be an increase on the year of roughly 2.5 to 10 percent on the year. So even the self-described contrarians aren't seeing a down market this year.

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