Ned Davis wrote the book “Being Right or Making Money” in 1991. We mention it this morning, because we are doing a conference call today with Ned at 10:00 a.m. (register here). As most of you know, Ned is one of the best on Wall Street. The book resides on my desk, because I often refer to it. In the introduction Ned writes (referring to himself):

"If you are so smart, why aren’t you rich? It was at about that time (1978-1980) that I began to realize that smarts, hard work, and even a burning desire to 'be right' were really not my problem, nor the solution to my problem. What I realized was that my real problems were a failure to cut losses short, an inability to be disciplined, difficulty admitting mistakes, fear and greed, and a lack of risk management, none of which had much to do with being right in the stock market world. It was thus a lack of proper investment strategy, not forecasting, that was holding me back. So I set out to get a computer and a good program, and started building timing models that I felt would give me the objectivity, discipline, flexibility, and risk management that I needed to make consistent profits. And since 1980, my company Ned Davis Research, Inc. has been dedicated to building timing models that do not forecast, are designed to make money."

Gosh, if that sounds like me, it should, because that is what I try to do. As my father used to tell me, "Son, if you think the stock market is going up, be bullish. If you think it is going down, be bearish. But for gosh sakes make a call, because there too many pundits in this business that talk out of both sides of their mouths so that no matter what the stock market does they can say, “See I told you that was going to happen.”

Ladies and gentlemen, if you draw a line in the sand, and make a call, you are going to be wrong and a lot more often than you think. To that point, I have been bullish since the selling climax low of December 24. My initial upside short-term target zone for the S&P 500 (SPX/2670.71) was 2600-2650, which I did not think would be eclipse on the current rally. I was wrong, as the evidential good news on the Chinese trade talk vaulted the SPX above 2670 last Friday. The “buying stampede” is now on session 18 in what is typically a 17-25 session upside skein with only one- to three-session pauses/pullbacks. The rally has left a number of finger-to-wallet ratios pretty overbought in the near term (Chart 1, page 2).