Abreast of the market: Market's logic: Skepticism is feeding the rally
If bull markets climb a wall of worry, this one's scaling up a sheer rock face.</br></br>As the Dow Jones Industrial Average recovered from a month-long sell-off to set a new record last week, it caught a lot of investors betting the wrong way. Sentiment indicators show that professional advisers have been deeply pessimistic since the rally began, which means it might have further to run, some say.</br></br>When the industrial average hit 6391.69 April 11, 9.8% below its March 11 high, bears outnumbered bulls among advisory services 41% to 35% in the weekly survey of Investors Intelligence, a newsletter. (The balance of them expected a correction.) The bullish reading slipped to 32%, a 2 1/3-year low; and even by Friday, with the Dow Jones industrials up 98 points on the week and 778 points from the recent low, bears still led bulls 39% to 36%.</br></br>"A few weeks ago, at the end of a horrible week, I talked to other portfolio managers on the train," says Edward Petner, president of fund manager Lynch & Mayer. "They were all depressed, shaking their heads, a lot of gallows humor, comments like `This is the worst week of my career,' and no one had the courage to buy anything."</br></br>That unbridled pessimism and illiquidity made conditions perfect for a snapback, says Mr. Petner, although he was surprised by its strength. "I guess [the rally] still has legs because there is still a reasonable amount of skepticism out there."