THE LMTR EDGE:

Join over 25,000 investors and get alerts for:
  • Market Timing Reports
  • Sentiment Updates
  • Chart of the Week
  • Weekly Podcasts
  • The Magic Number - Top Stocks

Stock Market Sentiment Indicates Investors Should Remain Cautious

We use investor sentiment as contrarian indicators about the direction of the stock market.  Short-term and long-term indicators this week were giving mixed messages, which tells us to remain cautious. The CNN Fear/Greed short term sentiment Indicator moved from a very greedy 62 at the beginning of May down to 28, which is a positive signal for the stock market short-term.

However, contrast that with the VXX volatility index (see chart). It has yet to show the kind of upward move to suggest a low could even be in sight.

Stock Market Sentiment Indicates Investors Should Remain Cautious
Stock Market Sentiment Indicates Investors Should Remain Cautious

As for the intermediate term, the Investors Intelligence Bulls Bears poll of market newsletter writers moved from 57% bulls to 50%. That’s a positive move from a contrarian point of view.  However, bullish sentiment remained at 18%.  History has shown us that bearish sentiment needs to climb to 30% or higher before we can call a durable stock market bottom.

Stock Market Sentiment Indicates Investors Should Remain Cautious
Stock Market Sentiment Indicates Investors Should Remain Cautious

Chart provided by https://www.investorsintelligence.com

 


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.

Leave a Reply

Your email address will not be published. Required fields are marked *

2018 - All Rights Reserved © LMTR, LLC

Privacy Policy - Contact Email: info@lmtr.com