Short-term sentiment last week appeared to indicate that the market was oversold from a contrarian point of view. The CNN Fear/Greed index at 10, which is very low, and the Ned Davis Research sentiment gauge at 26 were both on the oversold side of the ledger.
Meanwhile the intermediate-term sentiment gauges were more elevated than I would like in order to call a solid, intermediate-term bottom. The Investors Intelligence Bulls/Bears poll of market newsletter writers came in at 48% bulls and 20% bears. That’s a troublesome reading because with all the damage in the markets, one would assume there’d be more fear. The bears at 20% hardly budged from the previous week. That number would need to move up not the 30s at a minimum before we get at a solid, intermediate-term bottom.
The market has had another terrible week, with the bank stocks leading us down which is always a bad sign.