Spamdex - Spam Archive

Report spam

Send in your spam and get the offenders listed

Create a rule in outlook or simply forward the spam you receive to questions@spamdex.co.uk

Also in e.moneyandmarkets.com

Too Many Bears Can be a Good Thing

Having trouble viewing this email? View it online.
Thursday, August 6, 2015
Money and Markets
YOUR BEST SOURCE FOR THE UNBIASED MARKET COMMENTARY YOU WON'T GET FROM WALL STREET
Why Too Many Bears Can be a Good Thing for Stocks
by Mike Burnick

Dear ,

Mike Burnick

Last week in Money and Markets, I pointed out why bad market breadth is a warning sign for stocks. In addition to market internals, like advancing versus declining stocks plus new highs and lows, another key factor to keep a watchful eye on is: sentiment.

Stocks have been locked in a frustrating trading range all year. In fact, it's been the most do-nothing, range-bound market I can remember in the 30 years I've been in this business.

For instance, when the S&P 500 Index dropped below its 50-day moving average early this week, it was the 31st time this year stocks crisscrossed that key technical level, which defines a market uptrend versus a downtrend.

Financial Security in Times of Crisis

Mike Larson wants to help you shield your wealth against major market reversals by identifying major dangers on the horizon. He also wants to help you avoid losses by identifying stocks that are simply too risky for you. To get everything you need to safely grow your wealth today, click here!

Internal Sponsorship

You have to go all the way back to 1933, in the midst of the Great Depression, to find a year with more up and down swings. And that dubious record is almost certain to fall this year, with nearly five months remaining in 2015!

With the trend in stocks so undecided, investors are becoming paralyzed with indecision themselves, and that is showing up in several market sentiment gauges I watch closely.

Take a look at the graph below, courtesy of Bespoke Investment Group and you'll see what I mean.


Click image for larger view

The graph plots survey results from the American Association of Individual Investors, which has been polling investors for decades about whether they are: bullish, bearish or neutral on stocks over the next six months.

As you can see, bullish sentiment has been falling fast, dropping for 18 straight weeks, to just 21% last week. That's near the lowest level of the past several years.

According to AAII, the long term average bullish reading from Main Street investors is nearly 40%, so we're at just half that level right now. On top of that, the percentage of bears jumped to 40.7% last week, the most in nearly two years.

This pervasive bearishness might sound alarming at first blush, but like most sentiment measures, this is a contrary indicator. When there are too many bears, there may be no one left to sell, so that may be the best time to buy!

But it's not just mom-and-pop investors who have turned bearish on this trading range market, the Wall Street pros have too, and this is an even more profitable contrary buy signal!

Merrill Lynch conducts a monthly sentiment survey of its own: The Sell Side Consensus Indicator. They essentially hold up a mirror to their own industry peers by polling the average equity allocation recommended by Wall Street brokers.

And it's no surprise that Wall Street's consensus view has proved to be a reliable contrary indicator historically.

In other words, it's bullish for stocks when Wall Street's best and brightest get too bearish about the market. And when Wall Street turns extremely bearish, it has been a reliable buy signal in the past.


Click image for larger view

As shown in the graph from Merrill above, this contrary indicator is on a buy signal right now. In fact, Wall Street's bearishness is even more extreme now than at the market lows in March 2009. The only time it was more bearish (i.e. bullish for stocks) was 2012, not long after the last significant stock market correction of nearly 20% in 2011.

Based on Merrill's research, whenever the indicator has been this low or lower in the past, stocks have moved higher 97% of the time over the next 12 months, posting a median gain of 25% or more!

Now, these sentiment indicators don't mean stocks can't go lower near term. After all, it's been over three years since the S&P 500 registered a correction even close to 10%, so we're certainly overdue.

But what these sentiment indicators do tell me is that investors on Main Street and Wall Street alike are getting worn out by this do-nothing, trading range market. And with pessimism on the rise, it's getting more and more likely that we will see a great buying opportunity at some point this year. So keep some dry powder and stay tuned.

Good investing,

Mike Burnick


The investment strategy and opinions expressed in this article are those of the author's and do not necessarily reflect those of any other editor at Weiss Research or the company as a whole.

Have comments? Tell Us!

Facebook Twitter Linkedin YouTube Pinterest

About Money and Markets
For more information and archived issues, visit moneyandmarkets.com
Money and Markets is a free daily investment newsletter published by Weiss Research, Inc. This publication does not provide individual, customized investment or trading advice. All information is based upon data whose accuracy is deemed reliable, but not guaranteed. Performance returns cited are derived from our best estimates, but hypothetical as we do not track actual prices of customer purchases and sales. We cannot guarantee the accuracy of third party advertisements or sponsors, and these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our Terms and Conditions. View our Privacy Policy. Would you like to unsubscribe from our mailing list? To make sure you don't miss our urgent updates, just follow these simple steps to add Weiss Research to your address book.

Attention editors and publishers! Money and Markets teaser content may be republished with a link to the full story on MoneyandMarkets.com. Such republication must include attribution with a link to the MoneyandMarkets home page as follows: "Source: moneyandmarkets.com"

Money and Markets: A Division of Weiss Research, Inc. |

4400 Northcorp Parkway | Palm Beach Gardens, FL 33410 | 1-800-393-0189

---------------------------

All titles, content, publisher names, trademarks, artwork, and associated imagery are trademarks and/or copyright material of their respective owners. All rights reserved. The Spam Archive website contains material for general information purposes only. It has been written for the purpose of providing information and historical reference containing in the main instances of business or commercial spam.

Many of the messages in Spamdex's archive contain forged headers in one form or another. The fact that an email claims to have come from one email address or another does not mean it actually originated at that address! Please use spamdex responsibly.


Yes YOU! Get INVOLVED - Send in your spam and report offenders

Create a rule in outlook or simply forward the junk email you receive to questions@spamdex.co.uk | See contributors

Google + Spam 2010- 2017 Spamdex - The Spam Archive for the internet. unsolicited electric messages (spam) archived for posterity. Link to us and help promote Spamdex as a means of forcing Spammers to re-think the amount of spam they send us.

The Spam Archive - Chronicling spam emails into readable web records index for all time

Please contact us with any comments or questions at questions@spamdex.co.uk. Spam Archive is a non-profit library of thousands of spam email messages sent to a single email address. A number of far-sighted people have been saving all their spam and have put it online. This is a valuable resource for anyone writing Bayesian filters. The Spam Archive is building a digital library of Internet spam. Your use of the Archive is subject to the Archive's Terms of Use. All emails viewed are copyright of the respected companies or corporations.

Our inspiration is the "Internet Archive" USA. "Libraries exist to preserve society's cultural artefacts and to provide access to them. If libraries are to continue to foster education and scholarship in this era of digital technology, it's essential for them to extend those functions into the digital world." This is our library of unsolicited emails from around the world. See https://archive.org. Spamdex is in no way associated though. Supporters and members of http://spam.abuse.net Helping rid the internet of spam, one email at a time. Working with Inernet Aware to improve user knowlegde on keeping safe online. Many thanks to all our supporters including Vanilla Circus for providing SEO advice and other content syndication help | Link to us | Terms | Privacy | Cookies | Complaints | Copyright | Spam emails / ICO | Spam images | Sitemap | All hosting and cloud migration by Cloudworks

Important: Users take note, this is Spamdex - The Spam Archive for the internet. Some of the pages indexed could contain offensive language or contain fraudulent offers. If an offer looks too good to be true it probably is! Please tread, carefully, all of the links should be fine. Clicking I agree means you agree to our terms and conditions. We cannot be held responsible etc etc.

The Spam Archive - Chronicling spam emails into readable web records

The Glass House | London | SW19 8AE |
Spamdex is a digital archive of unsolicited electronic mail 4.9 out of 5 based on reviews
Spamdex - The Spam Archive Located in London, SW19 8AE. Phone: 080000 0514541.