Chatting with my good trading buddy Patrick Ceresna of MacroVoices and BigPictureTrading fame yesterday and he said to me, “what’s with this crap (ok, he didn’t use the word crap, but let’s pretend) with you being so negative? I am supposed to be the bearish one.”

It made me laugh, and I started to worry that I might be overstaying my welcome on the dark side.

Although I love my good friends at Marketwatch, I doubly worry when I see headlines like this (click here for full story:

So yeah, I am paring back some of my bearishness this morning, and let me tell you one of the reasons why.

I am a big Ed Yardeni fan. And I am especially enamoured with what he calls his “Fundamental Stock Indicator.” I have written it up in the past, so if you want a full explanation, please visit Obi-Ed’s Magical Indicator.

Well, when I update this “magical” indicator, it is showing no signs of faltering up here.

In fact, there is a huge disconnect between the two series!

I know that stocks are discounting mechanisms, so there is a decent chance that the individual components that go into the indicator will sag in the coming months (don’t forget two of the three are not market based, but instead economic series), yet I can’t help but worry that stocks are being overly sensitive to this possibility.

For those that want an update on the makeup of the indicator, here are the three charts:

To get really bearish down here, you either need to think that Dr Ed’s indicator will stop working, or that employment and consumer confidence will sag, and/or raw spot commodities will plummet.

Not sure any of those are good bets. Time to be less bearish. Patrick – you can be the bearish one again.