The bulls are terrified

Good morning and welcome back to the funny farm, where it’s best not to take the pills they’re trying to give you.

On Monday I’d asked you guys to answer my poll question of who’s more scared, the bulls or the bears. The results were surprising to me in how overwhelming in one direction they were — The bulls are more scared. I had 70 responses and it was 61 Bulls, 9 Bears. The way to think about this “Who’s more scared” poll is that it generally works as a great contrarian indicator when it’s this far skewed to one side.

When the bulls are scared, it’s time to buy. When the bears are scared, it’s time to sell. We’ll see if this time turns out to be an exception and earnings season here certainly could be a catalyst to the downside for the near term. And even though this poll has worked excellently as a contrarian indicator over the years, the markets can and do change over time and it’s possible that at some point the efficacy of this poll fails. High speed trading, government bailouts and endless financial crises are the kinds of things that change near-term market dynamics.

But then again, how many times have you heard the old saying about buying when others are fearful.

You guys have seen me turn cautious for the near-term several times in the last few years even as I’ve been very bullish about the markets overall. And l0ng-time readers have seen me turn outright bearish about the economy and the markets back in late 2007. So you know I’m no perma-bull. But I do remain bullish here heading into earnings and the results of my “Who’s more scared” poll certainly reinforces that.

I’m not doing any trading yet other than adding some DDD common as I’d noted I was going to yesterday.

Our other trade from yesterday, the PCXCQ is down a couple cents today, now trading at about 20 cents per share. I’m not adding any more to it yet, but I might if it gets down closer to 15 cents today. Remember that this is a very risky, short-term trade on a technical concept of buying a stock the day it declares bankruptcy and selling it to the guys who were already short before the announcement and now want to buy shares to cover their shorts and/or to other shareholders/debtholders who often step into buy common shares to gain leverage in the bankruptcy proceedings. Very risky stuff.