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Glimmer Of Hope In A Terrible Tape

Looking for a slice of optimism in an otherwise bleak tape? How about this.

We’re now hearing an analyst who’s been largely bullish is going to the dark side.

Isn't that good to hear? No joke, it's a positive. We'll explain in a minute but first some background.

We’re talking about Dan Sullivan, author of The Chartist newsletter.

Sullivan, who's been writing for over 30 years, is widely considered a "formidable ally to the bulls," according to a recent report.

And Sullivan is advising his clients be in cash - 100% cash.

In fact, Sullivan’s market outlook is shared by most newsletter writers – though not to the same extreme.

Mark Hulbert of Hulbert Financial Digest Editor tells Fast Money in a live interview, that the overwhelming majority of newsletter writers are very bearish – on average calling for only 20% exposure to stocks.

Now here's why it's good.

”We're seeing one of the fastest trips from the bull side to the bear side that I’ve seen in years,” Hulbert says.

And that’s good!

Huh?

”We saw as much bullish sentiment in late April near the highs as we have seen at any time in the last decade.”

In other words when newsletter writers were all very bullish it signaled a top.

And now that they’re all so bearish it could be a sign of the bottom. As you likely know, when investors throw in the towel it historically signals a turn in the market.

What’s the trade?

”The time to buy is when the blood is running in the Street and believe me the blood is running,” says Hulbert.

Like the headline says, maybe this is a glimmer of hope in a terrible tape.

What do you think? We want to know!



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Trader disclosure: On May 19 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Jon Najarian owns (GS) puts; Jon Najarian owns (JPM) puts; Jon Najarian owns (XLF); Jon Najarian owns (SPY); Jon Najarian owns (NYX) and (CME); Jon Najarian owns (NYX) and (CME) puts; Jon Najarian owns seats on NYSE, CME & CBOE; Grasso Owns (BP), (NDAQ), (DYN), (LPX), (ASTM), (ABK), (BAC), (BGP), (C), (CVGI), (JPM), (PRST), (PFE), (BA), (T), (CSCO), (X); Najarian Owns (AMD) Calls; Najarian Owns (C) Calls; Najarian Owns (CAT) Call Spread; Najarian Owns (DELL) June Calls, Is Short (DELL) May Calls; Najarian Owns (HPQ), Is Short (HPQ) Calls; Najarian Owns (MS), Is Short (MS) Calls; Najarian Owns (MCD) Call Spread; Najarian Owns (NOVL) Calls; Finerman's Firm Is Short (IJR), (MDY), (IWM), (SPY); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC), (BAC) Preferred; Finerman Owns (GOOG); Finerman's Firm And Finerman Own (HPQ); Finerman's Firm Owns (JPM), (JPM) Calls; Finerman Owns (JPM); Finerman's Firm Owns (TJX); Finerman Owns (WFC) Preferred; Finerman's Firm Owns (YUM); Terranova Owns (PFE), (GLD); Cortes Is Long Euro; Cortes Is Long Crude Oil; Edwards owns (VXX)

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