Sentiment Indicators Show Equity Investors are Finally Getting Worried
We use investment sentiment as contrarian indicators because historically investors tend to be terrible at market timing, buying nearer tops and selling nearer bottoms. So for practically all of 2018 as the markets cascaded down, investors remained unduly optimistic. Now they are finally showing signs of fear, which could be part of a bottoming process.
Short-term investor sentiment this week showed growing fear. The CNN Fear/Greed index moved down to 4. The Ned Davis Research short-term sentiment indicator fell to 6. Meanwhile, the NDR intermediate sentiment indicator also showed increased fear, moving from 58 to 41.