Historically reliable sentiment gauges we use as contrarian indicators tell us the equity markets are headed for some profitable upward bounces, particularly for the near term. The CNN Fear/Greed Index at 8 and the Ned Davis Research (NDR) short-term sentiment at 25 indicate the markets are oversold.
Intermediate-term indicators are also adjusting downward suggesting upward market moves. The NDR crowd sentiment is below 50. Meanwhile the Investors Intelligence Bulls/Bears measuring sentiment among market newsletter writers is at 41% bulls and 19% bear. And while this isn’t a solid buy, which would occur when the bulls and bears are equal, it also is indicating the markets should be getting better in terms of investment opportunities.
Longer term we remain cautious based on several technical and economic indicators.