The seemingly-improbable stock market rally has faced much skepticism, but the bulls have continued to win out, as the S&P 500 ($INX) has now rallied 50 percent from its March lows. With each advance, however, the odds shift slightly more in favor of the bear camp having another day in the sun. And, as David Rosenberg points out, groupthink is one element necessary to push the market too far to an extreme.
Rosenberg, the long-time chief economist at Merrill Lynch noted for his early warnings about the credit and housing bubbles, wrote in a client note that "It does appear that we have some groupthink to consider - virtually everyone at this stage is now bullish on the market... As an example, a CNBC poll released yesterday showed that 90 percent of Wall Street economists believe the recession has ended. It is highly unlikely that 90 percent of the economics community can be right on the same thing at the same time."