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Investor Sentiment indicates Market is  Ready for Short-Term Bounce Intermediate-Term Sentiment Signals are Somewhat Positive

The most recent short-term sentiment gauges are indicating investors have turned very fearful about market conditions, with the CNN Fear/Greed index at 7 and the Ned Davis Research short-term indicator at 15. From a contrarian point of view this is very bullish for equity markets over the next four to six weeks since historically investors are usually wrong about market direction.

Investor Sentiment indicates Market is  Ready for Short-Term Bounce Intermediate-Term Sentiment Signals are Somewhat Positive

Investor Sentiment indicates Market is  Ready for Short-Term Bounce Intermediate-Term Sentiment Signals are Somewhat Positive
Investor Sentiment indicates Market is  Ready for Short-Term Bounce
Intermediate-Term Sentiment Signals are Somewhat Positive

 

 

 

 

 

 

 

 

Intermediate term indicators are leaning toward the bullish camp for the markets over the next six to nine months but they are not as outright positive as the short-term indicators.  The Investors Intelligence poll of sentiment of market newsletter writers has bearish sentiment unchanged at 21% and bullish sentiment retreating to 39%. Bearish sentiment for this poll needs to move into the upper 30s before I could feel more positive that  an intermediate bull market is ahead.  Meanwhile, the intermediate NDR moved down to 50, another positive signs for the markets. But, based on historical trends, it should  be at 40 to be really signaling an intermediate market bounce.


Brad Lamensdorf

Brad Lamensdorf, the founder and portfolio manager of Active Alts, is a principal and co-manager of the AdvisorShares Ranger Equity Bear ETF. He previously managed a long-short investment partnership from 1998-2005 under the name Tarpon Capital Management. Earlier in his career Mr. Lamensdorf was an equity trader/market strategist for the Bass Brothers’ trading arm. He managed a short only portfolio in addition to co-managing a $1bil hedging program. He also served as in-house market strategist for the entire internal and external network of Bass Brothers money managers.

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