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Sentiment Indicators Not Saying Yay nor Nay on Stock Market Direction

Sentiment Indicators Not Saying Yay nor Nay on Stock Market Direction. We use investor sentiment as important  indicators for guidance on the direction of the stock market. But there are times sentiment indicators can tell us little or nothing. For example, as you can see from the chart below, the SentimenTrader’s Smart Money/Dumb Money Confidence spread is stuck in the neutral range. So, what we do? Although sentiment is a valuable tool, it is among a number of indicators we use.  For instance,  we’re watching very closely the decline of share price of JP Morgan Chase (see Chart of the Week).  It is the largest bank in the United States and sixth largest in the word in terms of assets. Future precipitous declines are a good indication of rough times ahead for both the market and the economy.

Sentiment Indicators Not Saying Yay nor Nay on Stock Market Direction
Sentiment Indicators Not Saying Yay nor Nay on Stock Market Direction

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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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