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Rising Fear Means Stocks Are At or Near the Bottom

Fin - Breakout - US

Helen Keller once said, "The only thing worse than being blind is having sight but no vision."

And right now, it seems, almost every strategist/adviser/professional/pundit, etc., that we talk to is looking for roughly the same thing from the stock market: a choppy summer with perhaps a bit more weakness for stocks before a big year-end rally that takes us to 1,450 on the S&P 500.

It makes me nervous. I can't help but feel that this 8 percent slide has been way too orderly and predictable, sort of like a rain delay in baseball that you know will stink until it passes.

If only it really worked that way. And yet guest after guest slaps down my ''thunder clap'' thesis, that the snoozy summer sell-off will end with a bang, not a whimper.

Ryan Detrick, the senior technical strategist at Schaeffer's Investment Research, is but the latest guest to bury us with stats and analysis that essentially come to the same conclusion.

As a big VIX watcher, he says the run-up in the ''fear index" from 15 to 24 has put it "about 40 percent above its 50-day moving average,"which he says "is consistent with past bottoms." Add in unusually heavy volume in ''Vix calls" and we're halfway home on the Detrick Theorem, a.k.a. the path to 1,450.

"Markets peak when there's euphoria," Detrick says, correctly adding that it sure doesn't feel very euphoric lately. But he also says "markets bottom with despair," to which Macke and I correctly pointed out that it doesn't really feel desperate or scary. In fact, it has been so boring that Macke confessed that he is in early-stage planning to launch Breakout: The Musical, just to spice things up a bit.

Sure, the flow of money out of mutual funds is often held up as an inverse predictor in that the little guy always gets it perfectly wrong. I don't think it's that simple anymore and wonder if the "little guy" hasn't just said screw it.

What do you say? Is the 1,250 - 1,450 consensus range for real or about to be the next log tossed on the burning scrapheap of disproved forecasts? Comment below or drop us a line at Breakoutcrew@yahoo.com.