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Investor Sentiment Suggests Market Bounce

Short-term investor sentiment has turned bullish.  The CNN Fear/Greed at 13means investors are very fearful. The Ned Davis Research short-term gauge is at 13. Both are very bullish signals from a contrarian point of view because investors are historically wrong about market direction.

Meanwhile, intermediate term sentiment also is looking more bullish. The NDR crowd sentiment gauge is at 41.  It was at 79 13 months ago.  Which means a lot of optimism has been wrung out of the market. That’s positive for the market from a contrarian point of view. Another positive: The Investors Intelligence Bulls/Bears poll of market writers is also getting more bullish from a contrarian point of view with bulls at 29% and bears at 34%.  That’s a 5% negative spread compared to a positive spread in the mid-40s a year ago. A negative spread historically has signaled a market bounce.

nvestor Sentiment Suggests Market Bounce
Investor Sentiment Suggests Market Bounce

A note of caution.  We continue to believe base on historical data that the market will be very volatile and highly risky for 2019.

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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