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Sentiment Gauges are Mixed in Terms of Where the Market is Headed

Short-term sentiment last week appeared to indicate that the market was oversold from a contrarian point of view. The CNN Fear/Greed index at 10, which is very low, and the Ned Davis Research sentiment gauge at 26 were both on the oversold side of the ledger.

Sentiment Gauges are Mixed in Terms of Where the Market is Headed
Sentiment Gauges are Mixed in Terms of Where the Market is Headed

Meanwhile the intermediate-term sentiment gauges were more elevated than I would like in order to call a solid, intermediate-term bottom. The Investors Intelligence Bulls/Bears poll of market newsletter writers came in at 48% bulls and 20% bears.  That’s a troublesome reading because with all the damage in the markets, one would assume there’d be more fear. The bears at 20% hardly budged from the previous week. That number would need to move up not the 30s at a minimum before we get at a solid, intermediate-term bottom.

Sentiment Gauges are Mixed in Terms of Where the Market is Headed
Sentiment Gauges are Mixed in Terms of Where the Market is Headed. Chart Courtesy of Investors-intelligence.com

The market has had another terrible week, with the bank stocks leading us down which is always a bad sign.


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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