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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.

Sentiment Indicators Show Equity Investors are Finally Getting Worried
Sentiment Indicators Show Equity Investors are Finally Getting Worried

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.

Sentiment Indicators Show Equity Investors are Finally Getting Worried
Sentiment Indicators Show Equity Investors are Finally Getting Worried

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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