I have previously stated my view that the stock market is drowning in a sea of hope. As with all analyses based on sentiment, the problem is how to measure it. How much hope is still out there?
Apparently, quite a lot.
Here are a few pieces of evidence, gleaned from a quick read of today's Wall Street Journal.
Page A1: "Investors continue to hope for a bottom."
Page A2: "[Obama] is more popular than ever. Americans are hopeful about his leadership...."
From the same page, reporting poll results: "The survey shows that 41% of Americans say that the country is headed in the right direction, up from 26% in mid-January."
Also from the same page. The graph of right direction/wrong direction polling shows the gap narrowing considerably since last fall when over 75% thought the country was on the wrong track, versus around 15% who thought it was on the right track.
Page D1: Explaining why some people are feeling good when their portfolios have lost half their value, Jeffrey Zaslow writes: "There is also a growing 'noncomplaining' movement that touts the belief that whining doesn't work as a strategy, and that happiness can be found through rituals such as writing in 'gratitude journals.'"
Maybe we have gotten a little too good at manipulating emotion.
While I agree that complaining never really solved anything, I also think that happiness-gathering journals can become a new way to whistle past the graveyard.
Sometimes fear and despair are signs that you are in touch with reality.
I suspect that if the market mounts something of a rally, the hope and optimism numbers will fly off the chart. That would not be a good omen.