If you are positive on the direction of the stock market and feeling lonely about it, that’s actually a good sign.
1. Investors Intelligence Bull/Bear Ratio If you follow just one sentiment indicator, make it this one. This gauge is based on a survey of over a hundred market newsletter writers. Historically, when the ratio of bulls to bears is less than one, that’s a negative sentiment extreme, which tells us the market is a buy. The chart below, from Yardeni Research, shows the historical perspective. The reading on Oct. 4 stood at 0.61, an extreme low that demonstrates extreme negative sentiment.
A simpler way to use this measure is to consider the ratio of bulls to the number of bulls plus bears. As the chart, below, from Yardeni indicates, reads of 35 or below are very rare, which tells us they are buyable extremes. The reading in early October was 30.4. The price-to- earnings ratio of the Russell 2000 RUT, -0.30%, a small-cap index, recently fell to 11. This looks like an extreme because that is the lowest it has been since 1990, and it is 30% below its long-term average since 1985, notes Bank of America.
An anecdotal measure “If there is a recession, it will be the most widely anticipated recession ever, which means it probably won’t happen,” Ed Yardeni, at Yardeni Research, told clients in a meeting Monday.
mbrushstocks Problem is people been crying all year and the contrarian trade has gotten steam rolled as well.
mbrushstocks fundstrat said in March, when markets were down 5% from ATH, that sentiment was worse than he’s ever seen and he expected a “face ripping” rally…
mbrushstocks Not until the real crash later this year/early next year.
mbrushstocks 💯
mbrushstocks Not everything is loss, sometimes it's just deliverance...
mbrushstocks Lol I swear I was hearing “blood in the streets” when we were 5% off the all time highs. fundstrat was making the case for a face ripping rally because he never saw sentiment so bad…