FYI: The U.S. stock market hasn’t yet hit a correction low. That’s the conclusion contrarians are drawing from the latest investor sentiment data.
Despite a 6.6% decline in the Dow Jones Industrial Average DJIA, +1.20% , including an 800-point drop on Wednesday of this week, many short-term market timers are still giving the stock market’s June-July rally the benefit of the doubt.
Assuming this recent bout of weakness lives up to historical patterns, more market weakness is needed before there is a strong enough “wall of worry” among investors to support a tradable rally.
Consider the average recommended equity exposure among the several dozen short-term stock market timers I monitor on a regular basis (as measured by the Hulbert Stock Newsletter Sentiment Index, or HSNSI). This average currently stands at 7.9%.
Though that average is a lot lower than the 84.2% reading that prevailed in early July, it is still markedly higher than the readings below minus 20% that accompanied the market’s late-December lows.
Regards,
Ted
https://www.marketwatch.com/story/heres-why-us-stocks-could-fall-further-2019-08-16/print
