FYI: There’s too much optimism on Wall Street. That’s surprising, since impeachment news and increased recession odds ought to have sent all but the most die-hard bulls into the bears’ camp.
Last week, the Institute of Supply Management’s gauge of factory activity fell to its lowest level in a decade. Service-oriented companies (the sector that employs a large majority of Americans) experienced their slowest growth in three years.
These developments (and more) saw the Dow Jones Industrial Average DJIA, +1.42% shed more than 800 points over the first two trading days of October. That’s the worst start to a calendar quarter since 2008.
Yet only a few of the short-term market timers I monitor have thrown in the towel. That’s not encouraging for U.S. stocks from a contrarian point of view.
Consider the average recommended equity exposure level among these short-term timers (as measured by the Hulbert Stock Newsletter Sentiment Index, or HSNSI). This average currently stands at 23.2%, which is five percentage points above where the index stood at the beginning of September — when the Dow was higher than where it stands now. (See chart, below.)
Regards,
Ted
https://www.marketwatch.com/story/heres-one-more-reason-why-october-is-looking-muddy-for-us-stocks-2019-10-04/print
