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Category: Sentiment Updates

Sentiment Indicators Signaling Short-Term Market Bounce

The short-term CNN Fear &Greed Index is at an oversold 10, which is signaling a market bounce, from a contrarian point of view. The Ned Davis Research short-term sentiment indicator has pulled back to 33, which is also on the oversold side.

The Intermediate-term sentiment indicators are not quite as easy to read in terms of market direction, but are getting more optimistic. The NDR Crowd Sentiment has fallen to 59, but it needs to get below 50 for a more bullish signal. The Investors Intelligence Bulls and Bears, a polling of sentiment of market newsletters, is at 42% bulls and 21% bears. Bearish sentiment needs to move up at least 10% before there is a clear bullish market signal.

Sentiment Indicators Signaling Short-Term Market Bounce
Sentiment Indicators Signaling Short-Term Market Bounce

Short-Term Sentiment Market Indicators Remain Bullish

The CNN Fear/Greed is at a bullish 17, signaling the market should go higher for the short-term. Ned Davis Research (NDR) short-term sentiment at 39 remains bullish but not quite as bullish as a week ago when it was at a very oversold 20.

Intermediate sentiment indicators are on the bullish side but not quite as optimistic. The Investors Intelligence survey of more than 100 market newsletter writers is at 42.5% bulls and 19.5% bears, a somewhat bullish indicator from a contrarian point of view. At what level would this sentiment gauge signal a major new market advance? That would be when bullish and bearish sentiment are about the same. Meanwhile the NDR intermediate crowd sentiment index is in between a strong 40 buy level and very bullish 70 level from a contrarian point of view.

Short-Term Sentiment Market Indicators Remain Bullish
Short-Term Sentiment Market Indicators Remain Bullish

Sentiment Indicators Suggest Upward Moves for Equity Markets

Historically reliable sentiment gauges we use as contrarian indicators tell us the equity markets are headed for some profitable upward bounces, particularly for the near term. The CNN Fear/Greed Index at 8 and the Ned Davis Research (NDR) short-term sentiment at 25 indicate the markets are oversold.

Intermediate-term indicators are also adjusting downward suggesting upward market moves. The NDR crowd sentiment is below 50. Meanwhile the Investors Intelligence Bulls/Bears measuring sentiment among market newsletter writers is at 41% bulls and 19% bear. And while this isn’t a solid buy, which would occur when the bulls and bears are equal, it also is indicating the markets should be getting better in terms of investment opportunities.

Longer term we remain cautious based on several technical and economic indicators.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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