FYI: There is finally enough pessimism on Wall Street to make contrarian-minded investors take notice.
Contrarians turn bullish when the prevailing mood is extreme pessimism, and there was insufficient pessimism up until just the last few days. A month ago, I concluded after analyzing senitment that “it’s still too early to jump back into stocks.”
The sentiment picture today is markedly different. Even though the stock market today is more or less at the same level it was a month ago, the average market timer is significantly more bearish. That’s a good sign from a contrarian point of view.
This increased pessimism is evident in both of the stock market sentiment indexes that I maintain. The first represents the average recommended equity exposure level among short-term market timers who focus on the Nasdaq market (as measured by the Hulbert Nasdaq Newsletter Sentiment Index, or HNNSI). On the occasion of my month-ago column, this average recommended exposure level was minus 25.9%, which means that the average Nasdaq-focused timer was allocating 25.9% of his equity portfolio to going short.
Today, in contrast, with the market at essentially the same level as it was then, the HNNSI stands at minus 38.9
Regards,
Ted
https://www.marketwatch.com/story/these-investors-see-the-us-market-heading-into-a-strong-2018-finish-2018-11-06/print
