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Stock market sentiment – indicating top
In addition to fundamental and technical analysis, it is particularly important to measure the crowd’s sentiment regarding extreme bearishness or bullishness. A convenient tool for this is provided by the Investors Intelligence survey of investment advisors. According to the latest reading (April 27), 54.0% of advisors are bulls (up from 34.1% in February) and 18.0% are in the bear camp (down from 27.8% in February). As shown below, the last time bullish sentiment was at this level was in December 2007 when the S&P 500 Index was trading 26% higher at 1,500. Source: Bespoke, April 28, 2010. “Bulls around 55% and fewer than 20% bears are the first indications of a market top. As mentioned last week, we now classify the advisory sentiment as negative, similar to the outlook that started this year [and preceded a 9% correction]. Markets can still move higher and the bulls could approach 60% before a final top is in place. In the near-term, though we would expect a modest pull back to consolidate the near three-month rally. At present we do not project a correction approaching 10%,” said the report. I am holding a cautious stance here. 2 comments to Stock market sentiment – indicating topLeave a Reply | |||||||||||
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Hi Prieur,
Firstly, thanks for the great blog – you give me food for thought.
Re: investor sentiment, can you tell me how far it has fallen with the Greek crisis unfolding?
Also with respect to equities, how receptive are you to the argument that as cash give -ve real returns, fixed interest mostly is back to fair value, commercial property still needs to repair, equities actually represent the only main stream asset class which represent any value – especially considering the consensus view still argues against this?
Thanks
Ross