Sentiment Indicators Turning Negative as Investor Optimism Grows

Short-term sentiment indicators were of little use earlier this week in signaling market direction, while intermediate-term indicators were signaling the markets were headed lower. On the short-term side, the CNN Fear/Greed moved to 18, meaning investors were somewhat fearful, which is bullish from a contrarian point of view. However the Ned Davis Research short-term gauge…

Stock Market Sentiment Indicates Investors Should be Cautious.  We use investor sentiment on the market direction as contrarian indicators since investors usually are wrong. The indicators this past week and in recent weeks show sentiment remains complacent. This tells us that investors should be cautious. The CNN/Fear Greed short-term sentiment indicator is at 62, which…

By John Del Vecchio and Brad Lamensdorf Hedging is dead. As the markets climb higher, investors have abandoned protecting their portfolios. One of the clearest examples is from the Equity Hedging Index (EHI) calculated by SentimenTrader.com The EHI measures the activity across numerous ways that investors can hedge their portfolios. The more heavily hedged investors…

Short term gauges have retreated  after two weeks of selling. The CNN fear greed index is at 37, down from the mid- 50’s last week. The NDR short term sentiment gauge is at the mid-50 range, down from a recent peak of 85. While we are off the highs, the numbers haven’t entered into buy…

Investor Sentiment and Other Reliable Indicators Suggest Stock Market is Skating on Thin Ice.  We use investor sentiment as a contrarian indicator. Although the DJIA, S&P 500 and the Nasdaq Comp hit new highs, sentiment and other reliable indicators are telling us that the stock market is skating on thin ice.   For instance, the broad…