By Peter Brimelow, MarketWatch
NEW YORK (CBS.MW) -- The stop-start rally stops again. The stock market hesitated once more on Wednesday, decisively breaking last week's momentum.
The Hulbert Stock Newsletter Sentiment Index (HSNSI), measuring equity exposure of a subset of short-term market timers monitored by the Hulbert Financial Digest, was at 43.31 percent Wednesday night.
Mark Hulbert interprets that as not quite so encouraging as in early February, when bulls retreated rapidly when confronted with stock sag, although not yet clearly bearish. (See Mark's Feb. 2 column.)
Dow Theory Letter's Richard Russell, my veteran canary in the coal mine, remains extremely tense -- repeating that the stock market absolutely must not break below its January lows (Dow Industrials at 10,368.61, Transports at 3,454.78).
Last night, Russell wrote: "Is the stock market in trouble? Too early to say with just one day down. Let's see what the pessimists can do now -- let's not rush it."
One unusual development: the highly-respected, long time bullish institutional service www.haysmarketfocus.com has been making cautious noises -- short term -- for some time. The eponymous Don Hays' complaint is that, short term, the "psychology" of the market is weak.
One of his favorite sentiment indicators is the Rydex Asset Ratio, based on the mutual fund family's report of total assets in its bear index and money market funds by the total assets in its bull index and sector funds.
Right now, Hayes says, it's considerably above the 1.0 level (equal bearish/ bullish assets) that he'd like to see. Investors are to optimistic.
Hayes writes: "Remember, this is a contrary (dumb investor) gauge, and we want to move in the opposite direction."
Hmmm. My response to this: Run for hills.
Look to see what the best letters are doing. Maybe they know something.
When I last looked, the letters that had done best since the (cyclical?) bear market low in October 2002 were bullish. (See my Jan. 31 column.)
Last time, I looked at the stocks these letters recommended. What about the mutual funds?
Mark Hulbert reran the scan for me last night. A total of 48 letters beat the market since the low.
But the recent winners' stock recommendations were had a lot of overlap, with no less than nine recommending Pfizer /zigman2/quotes/202877789/composite PFE -2.33% .
In contrast, the recent winners' mutual fund recommendations are much more diverse.
Only three funds have as many as three services backing them.
No less than 17 funds have two backers or more.
The third column indicates the number of market-beating letters recommending that particular fund.
Editor's note: The most recent edition of the Hulbert Financial Digest is available by e-mail or regular mail. Highlights include:
Hazardous to your wealth: Choosing a newsletter based on last year's returns.
Long-term performance ratings: 16-page supplement covering the past 1-, 5-, 10- and 15-year periods.
Profiles: BI Research, The Investment Reporter, No Load Fund*X and The Prudent Speculator.