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Category: Sentiment Updates

Market Sentiment Gauges Warn: “Be Fearful” 

“Be fearful when others are greedy and greedy when others are fearful.”
– Warren Buffett

Short-term and intermediate-term sentiment gauges are signaling investors have become greedy –  warning signs that that stock prices are too high. The CNN Fear and Greed Index is now in greedy territory at 63.  Meanwhile, the Ned Davis Research (NDR) short-term sentiment gauge is at 85, compared with 18 last February. That also means greed and excessive optimism pervade investor sentiment.

Intermediate-term sentiment this week also moved into the sell territory.  The NDR Crowd Sentiment Poll moved up to 69, signaling excessive investor optimism.  Another contrarian indicator, the Investors Intelligence Sentiment Poll of investment newsletter writers, also move back into the sell area with 56% of writers bullish and 18% bearish.

Market Sentiment Gauges Flashing Mixed Signals

Short-term measures of investor market sentiment are flashing warning signs. The Ned Davis Research (NDR) gauge has moved up to a sell signal at 78, a very high number for this short-term measure. Meanwhile, at  62, CNN’s Fear/Greed gauge has moved higher into the greed zone, also warning investors to be cautious. from a contrarian point of view.

Long-term sentiment gauges, on the other hand, have become more bullish. The Investor’s intelligence bulls/bears sentiment number has

jumped to 52% bullish, while the bears have dropped to 19%. Meanwhile, the NDR intermediate crowd sentiment number is basically unchanged at 64.  While this is high, it does not enter intermediate sell territory until it reaches 70.

 

“Be fearful when others are greedy and greedy when others are fearful.”

–Warren Buffett 

Sentiment Remains Elevated

“Be fearful when others are greedy and greedy when others are fearful.”

–Warren Buffett 

Overly Optimistic Investor Market Sentiment Continues to Flash Warning Signs

Short-term market sentiment indicators were showing slightly less investor optimism last week. But, as  contrarian indicators, they were nowhere close to buy territory.  The CNN Fear/Greed index fell back to 48 compared with 55 the previous week.  At the same time, the widely followed Ned Davis Research (NDR) short-term sentiment indicator was still warning of excessive investor optimism despite falling to 62, down from 72 the week before.

Meanwhile intermediate term sentiment indicators showed investors remained stubbornly optimistic.  Investor’s-intelligence Bulls/Bears came in at 50% bulls and 20% bears. The NDR crowd sentiment moved from 66% to 63%..

Beyond warning signs from investor sentiment indicators, I should mention that key banking stocks are starting to fall apart, which could portend a major market correction. We remain cautious

 

Short term sentiment gauges have moved up quite a bit

The CNN greed fear index is at 55, up from the low teens a few

weeks ago. The NDR short term gauge is currently at 66, up from its lows in the teens in February.

This is a negative from a contrarian point-of-view, as

optimism has begun to rise.

Intermediate term sentiment from the Investor’s Intelligence  is at 46% bulls

and 19% bears.  NDR crowd sentiment is at 66. Both are midrange, however neither

have reached the oversold levels typical after such high numbers from January.

Sentiment Update – 05/02/18

Short term sentiment gauges, such as the CNN fear greed indicator and the NDR short term sentiment indicator are mid-range, at 44 and 54 respectively. This does not reveal a direction either way, and little has changed from last week. Intermediate indicators have yet to reach oversold territory. In January many sentiment indicators were as high as they had been in decades. Currently Ned Davis crowd sentiment is at 59, while the newsletter writers’ bulls/bears have improved to 19 bearish and 49 bullish. These indicators are not signaling that it’s a time to buy right now.

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