Investor Stock Market Sentiment Indicators Flashing Warning Signs
We use investor sentiment indicators as contrarian indicators on stock market direction because investors are historically wrong. The CNN Fear & Greed Index has moved up to 70, showing short-term sentiment has gotten bullish, a negative sign for the stock market. Meanwhile, the VIX volatility Index is as low as it was before last year’s 4th quarter selloff.
Intermediate sentiment also has become more optimistic. The Investors Intelligence Bulls/Bears poll of newsletter market writers is 54% bullish and 19% bearish. That’s a spread of 35% between the two, which is another warning sign.