Newspaper article THE JOURNAL RECORD

Some Analysts Urge Caution to Bullish Forecasts

Newspaper article THE JOURNAL RECORD

Some Analysts Urge Caution to Bullish Forecasts

Article excerpt

After a year of relatively modest investment returns, Wall Street seems to be positively brimming with enthusiasm for 1993.

Maybe too much enthusiasm, some analysts warn.

Given accumulating signs of an improving economy, and excitement over a new administration in Washington, most observers acknowledge that persuasive reasons for optimism abound.

"We end 1992 with the U.S. stock market showing its greatest bullishness since last December," said Stephen Quickel in his U.S. Investment Report newsletter.

"There is a sense of change and hope out across the land _ a growing conviction that the wearying recession is finally going away, that persistent national problems are going to be dealt with effectively, that stocks are headed upward.

"We are going to see corrections, of course, but we suspect that for the next few months they will be mild. The economic and corporate numbers are just too positive to keep this market down."

But while there may be a lot of substance behind such hopefulness, some observers warn, participants in the markets have been climbing on the bullish bandwagon lately with an eagerness that threatens trouble.

"Speculation has heated up and several sentiment indicators are waving caution flags," said Martin Zweig, an investment adviser in Wantagh, N.Y. "Also, the market has become increasingly overvalued."

"More and more investors are becoming overly optimistic, and we're now reaching a point of complacency," declared Stan Weinstein, editor and publisher of the Professional Tape Reader in Hollywood, Fla.

"Even the bears are ready to concede that January will be an up month. That's certainly worrisome from a contrary-opinion point of view."

Recent tallies of investment advisory services have shown a heavy leaning toward bullishness, while option traders have been eagerly buying calls (bets on rising stock prices) rather than puts (bets on lower stock prices).

"When the usually-wrong option speculators are this one-sidedly bullish, history shows that it's time to be careful," Weinstein said. …

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