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Recovery-Time and Sentiment Is High

[To the tune of “Summertime” from Gershwin’s Porgy and Bess]

And the credit’s still easy
Stocks are jumpin’
And sentiment is high

Valuations are rich
And your portfolio’s good lookin’ 
So hush Wall Street traders
Don’t be shy

One of these mornings
Dow’s going open limit down
Then you’ll dump your stocks
And you’ll avoid the slide

But until that morning
There’s a‘nothing can harm you
With Trump and Congress so well aligned

The 30-year high sentiment reading in Investors Intelligence % Bullish Advisors to 63.1% lyrically inspired me to pen the above parody. This latest 63.1% bulls reading is up from 61.2% last week and exceed the recent high three weeks ago of 62.7%. It also took out the 62.9% high from December 2004. It’s the highest bullish reading since 1987!

As II Editor John Gray points out in today’s report, “Above 55% bulls is a warning of a trading top area and above 60% suggests it is time to start taking defensive measures.” But, “Tops may take weeks or even months to form, unlike bottoms.”