By John Del Vecchio and Brad Lamensdorf
The level of bearishness in the market has now reached an extreme level.
Historically, with so many investors leaning in the bearish direction, it has typically been a profitable time to accumulate stocks.
Based on the current Bull vs. Bear spread, and a 13-week forward outlook, 88% of the time the market has rallied. The average return is 8.9%
The chat below illustrates that the level of bears is among the highest in the last 10 years.
Meanwhile, while bearishness is at extreme levels, technology stocks are washed out. The percentage of issues below their 200-day moving average has now fallen below 20%. As a result, as illustrated in the chart below, technology issues are deeply oversold. The last time technology stocks were this oversold (COVID lows), the market experienced a substantial rally
The combination of too much bearishness and a deep oversold level is creating conditions for a massive bounce.
To learn more about how these indicators can help manage risk in your portfolio, book a call with Brad.
DISCLOSURE: LAMENSDORF MARKET TIMING REPORT
Lamensdorf Market Timing Report is a publication intended to give analytical research to the investment community. Lamensdorf Market Timing Report is not rendering investment advice based on investment portfolios and is not registered as an investment advisor in any jurisdiction. Information included in this report is derived from many sources believed to be reliable but no representation is made that it is accurate or complete, or that errors, if discovered, will be corrected. The authors of this report have not audited the financial statements of the companies discussed and do not represent that they are serving as independent public accountants with respect to them. They have not audited the statements and therefore do not express an opinion on them. The authors have also not conducted a thorough review of the financial statements as defined by standards established by the AICPA.
This report is not intended, and shall not constitute, and nothing herein should be construed as, an offer to sell or a solicitation of an offer to buy any securities referred to in this report, or a “buy” or “sell” recommendation. Rather, this research is intended to identify issues portfolio managers should be aware of for them to assess their own opinion of positive or negative potential. The LMTR newsletter is NOT affiliated with any ETF’s. Active Alts is affiliated with Lamensdorf Market Timing Report. While LMTR uses charts from SentimenTrader, they do not have a financial arrangement with SentimenTrader Past performance is not indicative of future results.