Wall Street is a funny place, with its inverse indicators, relative outperformance, and discounting mechanisms that often predigest good and bad news before it happens. And so it almost seems fitting that a week after the S&P 500 touched a 4-year high - then failed to follow through - the stock-buying community is a tad nervous about getting in on a rally that began in early June.
What's worse, even though a dollar's worth of earnings costs 15% less today than it did at the top of the market five years ago, investors are still not moved to act on this theoretical sale or value.
"Cheap implies that going forward you're going to make money and that's the big question right now," says Tom Lydon, the editor of ETF Trends.com in the attached video. "There's lots to be uncertain about," he says what with the weather, the Fed, political conventions, the upcoming jobs report, and the ongoing mess that is Europe right now.
As much as Lydon says the S&P, at 12.7x forward earnings today is ''relatively cheap" compared to the 15.1x that investors were paying at the tippy-top in 2007, investors are disenchanted with stocks and taking money out.
"One thing that we're looking at is, are investors looking for information?" Lydon says. "Surprisingly, ETF-related searches (on the internet) are down 50% from this time a year ago, so it's amazing how the average investor really is not engaged or confident about the market going forward."
Of course, that hesitancy or disbelief could be a good sign - to a point.
"For us to make that next 11% climb from where we are right now in the S&P, to hit a new high where we were in 2007, the average investor is going to have to get engaged," Lydon says, and so-called ''cheapness" does not appear to be the motivating force.
What about you? Are you along for the ride, eying the exits or waiting for a pullback?