Where have all of the AAII bulls gone? Europe and emerging markets apparently...

Despite the S&P500 being only 24 points from all time highs, AAII investor bullish sentiment has reached unusually low levels.  Fund flow data indicates that over the past 2 weeks a lot of money has left US equity ETFs and flowed into developed international and emerging market ETFs.  The Fast Pitch blog indicated recently that fund manager US equity allocation is currently at a 9 year low.

From a contrarian perspective one must view this as positive.  With cash balances of the top companies in the S&P500 at record levels, corporate tax reform on the horizon combined with sound corporate and economic fundamentals, it makes sense to be a buyer of US equities.  I think the majority of investors are being distracted by the negative media and the recent Trump political drama.

Bearish sentiment is reaching extremes in some areas of the market. Is it time to be contrarian?

Sentiment on StockTwits is often telling.  Currently traders are bullish on defensive sectors such as utilities, consumer staples and healthcare.  Traders are very bearish on the broad S&P 500, Nasdaq and especially small caps.  This is after a huge rally of the Feb lows.  I think it's best to be contrarian at this juncture.

Will small caps outperform through 2016?

The Russell 2000 has lagged the S&P 500 since early 2014 - approximately 2 years.  Similarly in 2011, small caps turned down first prior to the Euro Debt Crisis induced mini bear market.  The 5 year chart shows that small caps have lagged the S&P 500 significantly.  These trends don't last forever.  Small caps are usually the first out of the gate during a market uptrend and the first into the tank during a market downtrend.  If one were to assume that the bad news is now behind us and the market will begin to price in future growth, small caps should lead at least for short term and intermediate term.  Since the market bottomed in Feb, small caps have been leading the S&P 500 by a 2:1 ratio - significant early outperformance.

Russell 2000 Turns Positive For The Year. Small Cap Stocks To Lead As Risk On Trend Resumes.

The Russell 2000 has rallied hard from the October lows after being down >10% for the year.  If history serves as an appropriate guide, small caps will lead the S&P 500 to the end of the year and beyond.  IWM is the largest ETF that tracks the Russell 2000.  VB, VXF and IJR are likely better ETF choices to track small US stock indices.

Vanguard Canada Must Own ETFs for Canadian Investors. VUN and VFV.

Vanguard Canada provide the best and cheapest ETFs available to Canadian investors.  Two must have ETFs for Canadian investors are the US Total Stock Market ETF (VUN) and the S&P 500 ETF (VFV).  Both are NOT hedged and provide broad exposure to the US stock market and the US dollar. They are the cheapest ETFs of their kind and have extremely low management expense ratios (MER).  The MER for VUN is 0.15% while the MER for VFV is a category low of 0.08%.

Canadian TSX Stock Market Uptrend Has Begun

All major sectors in Canada's TSX appear to be in the early stage of an uptrend.  Financials, materials and energy sectors are all showing bullish price momentum.  This could result in the TSX leading the S&P 500 for the intermediate term.  The S&P 500 has likely entered in to a period of price consolidation after an almost 2 year uptrend.

S&P 400 Mid Cap Index Is The Intermediate Term Winner

No one would have guessed in 2009 that the S&P 400 Mid Cap Index would lead as it has post financial crisis. The charts speak for themselves.  Visit www.chartoftheday.com for more great charts.

NASDAQ Outperforms The DJIA And S&P 500 2:1 Over The Long Term

Even after taking into account the dot-com bubble which reduced the NASDAQ by 78% from top to bottom, the NASDAQ still manages to outperform the DOW and S&P 500 by 2:1 over the long term. This chart says it all.