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Ryan Detrick: Buy the Fear

Breakout

Real live contrarians are a rare breed on Wall Street, so "Breakout" went to Cincinnati to find one.

Ryan Detrick of Schaeffer's Investment Research is a raging bull on the tape whose greatest fear isn't international tumult but rather missing out on the next leg of the rally. Also counter to current conventional wisdom, Detrick likes the looks of the "stealth rally" taking place in small- and mid-caps and prefers the little guys over the standard mega-cap "industrial, energy and tech" theme of the day.

Detrick, senior technical strategist at Schaeffer's, cites the 100% spike in the CBOE volatility index (VIX) during the recent pullback as evidence of a flighty investing public that has yet to fully embrace stocks after the '08 and '09 drubbing.

"We had, after the flash crash, 33 straight weeks of equity mutual fund outflows -- over $100 billion," and that trend is only now starting to reverse, he says.

In another example of turning the sentiment frown upside down, Detrick says even the valid concerns about the coming earnings season set the stage for positive moves in stocks. Detrick sees the current situation as similar to that of the fourth quarter last year, when tepid earnings met low expectations and a rally ensued.

Finally, Detrick sees seasonal trends as an investing tailwind, noting that the last five Aprils have all been positive, with an average return of greater than 4%.

Be sure to watch the video to get a dose of investing wisdom from the heartland. After you do, drop us an email at breakoutcrew@yahoo.com and let us know what you think.

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