Stock Market Sentiment Indicates Investors Should Remain Cautious
Stock Market Sentiment Indicates Investors Should Remain Cautious. We use investor sentiment as contrarian indicators about the direction of the stock market. Short-term and long-term indicators this week were giving mixed messages, which tells us to remain cautious. The CNN Fear/Greed short term sentiment Indicator moved from a very greedy 62 at the beginning of May down to 28, which is a positive signal for the stock market short-term.
However, contrast that with the VXX volatility index (see chart). It has yet to show the kind of upward move to suggest a low could even be in sight.
As for the intermediate term, the Investors Intelligence Bulls Bears poll of market newsletter writers moved from 57% bulls to 50%. That’s a positive move from a contrarian point of view. However, bullish sentiment remained at 18%. History has shown us that bearish sentiment needs to climb to 30% or higher before we can call a durable stock market bottom.
Chart provided by https://www.investorsintelligence.com