Anticipatory Bears Growl Louder, but the Market Isn't Paying Much Heed

Overseas markets are mixed to down on weak industrial orders in Germany, but the market continue to battle fears of slowing economic growth. U.S. indications are mixed in the early going as the indices try to build on Monday's breakout news, but low volume and a mixed reaction to China trade news is keeping further upside contained.

The big-picture bears are growling loudly about weak economic news, an inverted yield curve, the constant rallies on vague China news, slowing corporate earnings growth and a variety of other issues. They may have some very compelling arguments, but, once again, the market isn't paying much attention.

This disconnect between the strong bearish arguments and the price action of the market creates a large pool of anticipatory bears. They are convinced that the day of reckoning is coming soon and that the market eventually will succumb to their wisdom and insight. However, they constantly are caught on the wrong side of the action as friendly central banks, hope for a China trade deal and good technical action keeps the market running higher.

It is always easy to formulate a negative market argument if you try. There has never been a time in the market when the bears haven't had some very compelling arguments. The great dilemma is timing. Having a sound argument isn't very helpful if you can't time the market action with some degree of precision.

The indices on Wednesday reversed sharply intraday and closed weak, but still stayed close to flat. The China trade news provided a "sell the news" opportunity, but that doesn't mean there won't be another rally on that news again and again.

The bears were caught leaning the wrong way earlier this week with the slowing economic growth narrative when China put up better numbers than expected, but the negativity is building again as other reports roll in such as the German industrial data. As we head into earnings season there is sure to be increased talk about how earnings growth is slowing.

There are basically two choices for market players right now. You either embrace the bearish argument and anticipate that the market eventually will come to understand the pessimism or you stick with the price action as long as you can and look to exit before any major downtrend can take hold.

It should be obvious that I'm not fan of trying to anticipate a disaster no matter how smart the bears may sound. I'm going to stick with the price action as long as possible and will hit the eject button only when it starts to confirm all those things that the bears are worried about. They probably will be right at some point, but there is no way to know when.

The battle continues here on Thursday morning. The bulls are taking a bit of a rest, which allows the bears to growl a bit louder about the disasters that await. I'll be looking for some good stocks to buy while I make sure I protect recent gains.