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This dynamic is ‘wildly bullish’: Market strategist

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Trading Nation: The summer S&P outlook

Many investors and strategists see the market as potentially overextended and set to suffer from a possible rate hike, but it is the very prevalence of such views that have other strategists licking their chops.

"The lack of sentiment is wildly bullish," Raymond James strategist Jeff Saut put it flatly in a Tuesday note to clients.

He pointed to the most recent Barron's cover, which declared: "Why the Stock Market Won't Crash — Yet" as one among many signs that "continues to reinforce our belief that the secular bull market has years left to run."

There may be sense to going against the crowd in investing. The theory goes something like this: At times when many are bullish, there is little money left to be added to the equity market, and bullish news will be expected while bearish news will shock; at times when many are bearish, the opposite is true.

For instance, when Piper Jaffray technical analyst Craig Johnson looks at the market right now, he observes that "fund flows have been weak since April, yet the market continues to push ahead higher here."

"We think there is a lot of dry powder on the sidelines right now that is eventually going to step up and get into this market," Johnson predicted Friday on CNBC's "Power Lunch. "

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Of course, this doesn't mean the bears don't have salient points. Some of the more common were made by BlackRock strategist Richard Turnill as he downgraded his view on equities to neutral Tuesday: "The growing likelihood of an imminent Fed rate increase and more elevated U.S. valuations warrant short-term caution."

And Stifel Nicolaus portfolio manager Chad Morganlander said in the same Friday segment as Johnson that due to slow global growth, "you're going to see disappointment within the earnings cycle — earnings drive the stock market, and at valuations of 17.5 times [earnings], I don't think there's a lot of upside lift to the markets in general over the next sixth months."

To that, however, the bulls would respond that such widely publicized concerns are well-integrated within stock prices — so selling now due to such perceptions is unlikely to be wise.