Extreme bearishness is bullish — mostly

by Michael Tarsala

Wall Street analysts are more bearish than they have been in 15 years, according to a Merrill Lynch indicator.

Source: Pragmatic Capitalism

That’s considered a positive for the market. Analysts as a whole tend to be extremely bullish when markets are near a top and extremely bearish near bottoms.

Yet there’s one problem: It’s that market volatility also has come down so much in recent weeks.

Stocks would have a much, much easier time gaining ground if volatility was declining from an extreme.

So it’s hard to see this mostly bullish signal as a positive near-term catalyst for the markets.