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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.

John Del Vecchio

About John Del Vecchio Author of Rule of 72: How to Compound Your Money and Uncover Hidden Stock Profits and What’s Behind The Numbers: A Guide To Exposing Financial Chicanery And Avoiding Huge Losses In Your Portfolio, John is a forensic accountant at heart. Standing on the shoulders of the great David Tice, James O’Shaughnessy and Dr. Howard Schilit, he built a framework of algorithms and a multi-factor grading system that has made him one of the more successful short-sellers around. John graduated Summa Cum Laude from Bryant College with a B.S. in Finance and was awarded Beta Gamma Sigma honors. He earned the right to use the Chartered Financial Analyst designation in September 2001.

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