The Dow Jones Industrial Average Went Nowhere Wednesday. That's OK.

Michael Haddad

A real yawner. The market closed slightly down on Wednesday, with all three major indexes finishing in the red. President Donald Trump’s State of the Union last night made little splash among investors, while earnings season trundled on. Videogame stocks plunged on disappointing guidance, while General Motors shares rose after better-than-expected results. In today’s After the Bell, we…

…look into videogame stocks’ plunge; …explain why record-high investor sentiment can ring a warning alarm; …and look ahead at the major risks that could derail the market.

Bulls Coming Back

President Donald Trump’s State of the Union speech last night—mostly addressing a possible trade deal, drug prices, and infrastructure plan—didn’t move the market. All three major indexes moved only slightly below the break-even line.

The Dow Jones Industrial Average lost 21.22 points, or 0.1%, to 25,390.3, while the S&P 500 slipped 6.09 points, or 0.2%, to 2731.61 and the Nasdaq Composite dropped 26.8 points, or 0.4%, to 7375.28.

The S&P 500 has gained 9% in 2019, and sentiment has improved markedly from the end of 2018. Some 48.6% of respondent to the Investors Intelligence sentiment survey—the aggregated forecasts of over 100 newsletter writers—indicated that they were bullish on the market, up from 45.8%. That’s the most bulls since early fall 2018 when they made up 61.8% of the group. Bears remained unchanged at 20.6%. But don’t be too glad. Improving sentiment, when its gone too far, is a contrarian signal, and could indicate that a rally is running out of steam.

That’s especially true given the risks that remain to be navigated. “We have a potentially bigger government showdown on the horizon over the debt ceiling, we

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