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Category: Sentiment Updates

Investor Market Sentiment Indicators Suggest Rebounds are Likely in 2018

The CNN Fear/Greed is at 8, indicating there’s a lot of fear among investors. The Ned Davis Research (NDR) short-term gauge is at 23,  suggesting the market is oversold. Used as contrarian indicators since investors historically are wrong, that means we should be expecting some market rebounds following the recent big selloffs that devoured gains for the year.

Intermediate-term gauges also are suggesting some upward market momentum this year. The Investors Intelligence Bulls/Bears, which measures sentiment among more than 100 market newsletter writers, is down to 50 bulls, 18 bears. That is only mildly negative as a contrarian indicator, compared with very negative not too long ago when bullish sentiment was much higher. The NDR crowd sentiment also had a large move down to a slightly negative sentiment of 55.7%. While not indicating the market is clearly oversold, it is suggesting that there’s room for upward bounces

What does this all mean?  There’s likely some buying opportunities for the remainder of 2018, barring unforeseen events that would put the markets into a tail spin. Longer term, economic indicators (such as climbing interest rates and abnormally high price/earnings) are suggesting that there could be some rough times ahead in 2019.

Stock Market Direction Sentiment Indicators Remain Mixed

Sentiment indicators in the past week indicated that investors weren’t frightened by the recent big market drops. Perhaps it was because of the quick recovery leading to complacency despite some worrisome economic indicators signaling caution. In fact, short-term sentiment indicators have moved into “buy” and “near buy “categories. The CNN Fear/Greed is at 12, up from 8 a few days before. The Ned Davis Research short-term sentiment is close to a buy at 36.

However, intermediate sentiment indicators unlike the short-term indicators are still on the bearish side. The Investors Intelligence Bulls/Bears measuring market direction sentiment among market newsletter writers remains at 18% bears, unchanged from the previous week, which is bearish as a contrarian indicator. The bulls were at 51%, down from 61% three weeks before, but still in the negative territory. The NDR Crowd Sentiment is at 61, down from a more negative 69 two weeks ago but not anywhere close to an intermediate buy signal.

In other words, it seems the market bounce after the big drop lured investors into complacency despite worrisome economic indicators. Which tells us to remain cautious.

Stock Market Direction Sentiment Indicators Remain Mixed
Stock Market Direction Sentiment Indicators Remain Mixed



























Market Sentiment Indicators Warn: “Stay Cautious”

Intermediate sentiment indicators show investors have become slightly less bullish during the past week. But viewed as contrarian indicators that doesn’t mean we’ve reached a major bottom and you should throw caution to the wind. The Ned Davis Research (NDR) Crowd Sentiment was slightly less bearish at 62% compared with the previous week (70 is a sell signal), but still signaling caution. The Investors Intelligence poll of more than 100 newsletter writers remained clearly bearish as a contrarian indicator with 57% of the newsletters bullish and 18% bears.

The CNN Fear’/Greed Index was at 8 while the NDR short-term sentiment gauge was at 36, signaling the markets may be reaching oversold territory for the short term, but both are far from signaling the markets are reaching bullish territory.

In other words don’t be fooled by temporary upswings in the market. The worst may be yet to come.

Fear and Greed - Sentiment Chart Oct 11, 2018
Fear and Greed – Sentiment Chart Oct 11, 2018

Intermediate Market  Sentiment Indicator  Says “Be Cautious”

Intermediate term market sentiment indicator  is  flashing warning signs to be cautious.  The Investors-Intelligence polling of more than 150 market newsletter writers shows they are very optimistic. That is a warning sign from a contrarian point of view since they historically are wrong. Some 62% of the newsletter writers were bullish and only 18% were bearish. Meanwhile, the Ned Davis Research (NDR) Crowd Market Sentiment was at 68, very close to 70, which triggers a sell signal.

Meanwhile, short-term market sentiment remains neutral, which doesn’t give us guidance about market direction. The CNN Fear & Index is at 46 and the NDR short term market sentiment composite is at a neutral 58.

Intermediate Market  Sentiment indicator  Say “Be Cautious”

Intermediate-Term Sentiment Indicators Flashing Sell Signals

Intermediate term sentiment is quite negative. Investors-intelligence Bulls/Bears, which monitors attitudes of more than 100 market newsletter writers, is at 60% bulls and 18% bears. That’s very negative from a contrarian point of view. The difference between the bulls and bears is now at 42, which is an extreme warning sign. The Ned Davis Research Crowd sentiment is at 69, one point away from the official sell signal of 70.

On the other hand, short-term sentiment indicators are not signaling one way or the other about where the market was headed. The CNN Fear/Greed Index is at a neutral 46. And the NDR short term sentiment is at a neutral 51.

On future direction at this time.

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