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