Though prominent Wall Street strategists featured in Barron's recently nearly unanimously reiterated their optimism about the stock market for the rest of the year, I at least agree about near-term prospects.
One of my favorite contrarian sentiment indicators is the put-call ratio. It recently surged to a level even higher than it was late last summer, before a rebound of more than 20% in stock prices. In addition, a third-party sentiment indicator that I follow shows sentiment levels to be depressed, which has historically been followed by rising stock prices.
I also pay attention to insider buying and selling, especially with individual companies. In aggregate, insider buying relative to selling recently reached the highest level since the market bottomed a year ago.
These indicators, combined with attractive valuations on leading company stocks, suggest that for those with significant cash reserves, it is a good time to be buying some stocks--despite the historic tendency for market declines in September and October.
S & P 500: 1165