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 Indicators Suggest Investors Should be Cautious

Stock Market Sentiment Indicators Suggest Investors Should be Cautious.  We use investor sentiment as contrarian indicators on stock market direction. The latest sentiment indicators were moving toward overbought territory. This suggests investors should be cautious. For instance, the Investors Intelligence Bulls/Bears poll of stock market newsletter writers reported bullish sentiment was becoming more optimistic. This poll show bullish sentiment moving up to 50.5% from 48.1% last week and 42.7% before that. Bullish sentiment over 55% signals high risk and defensive action. Bearish sentiment was barely changed at 18.4% from 18.3% the week before. For contrarians, the paucity of bearish sentiment means higher risk.

Two other elements of the market signaling caution are the lack of breadth amid recent upward moves and that financials are doing so poorly. The fact that this major sector is not participating in the rally makes the rally itself suspect in terms of a true bull market.

Stock Market Sentiment Indicators Suggest Investors Should be Cautious
Stock Market Sentiment Indicators Suggest Investors Should be Cautious

Another note of caution comes from the Smart Money/Dumb Money Confidence Indicator which also is showing the market is moving toward the overbought direction it was in in the spring when it was indicating investors should sell.

Another note of caution comes from the Smart Money/Dumb Money Confidence Indicator
Another note of caution comes from the Smart Money/Dumb Money Confidence Indicator

See more Sentiment Updates:


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Your email address will not be published.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