Sentiment Is Greedy, Not Fearful
Putting aside CNN's measure, other indicators seem more greedy than fearful.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
You might recall about a week or so ago, there was a lively discussion on sentiment. So many were highlighting the CNN Fear and Greed Index, which was showing ‘fear’ as being a tell that sentiment was quite bearish.
I countered that with the Investors’ Intelligence bears being the lowest since 2018. I countered that with the 30-day moving average of the equity put/call ratio being the lowest since 2021 (but not as low as it was then). I countered that by noting even the AAII folks were now back to being relatively bullish. And then there were the NAAIM folks who had increased their exposure to just over 100.
This weekend, I saw that the Market Vane Percentage Bullish has moved to 72%. The last time they were this bullish was in December 2024, and prior to that was July 2024, just prior to a ten percent correction. So, I would repeat, I think that CNN’s Fear and Greed is the outlier, and I just don’t see the benefit to trusting an outlier.
Anecdotally, I watched an hour or so of television on Monday to see if the chatter had changed because some of those surveys were taken before midweek last week when the market took a spill. The chatter has gotten more ridiculous than usual. Let me explain.
First, there was a discussion about breadth and how poor the breadth has been. The three panelists were asked if that was a concern. Of course, it is, but it doesn’t really matter because as long as the AI stocks are going up, it’s all good. Stay long, they said.
The next panelist said pretty much the same. When asked if he was adding to the trades (presumably in AI, but it wasn’t clear) here, he wavered. He was quite wishy washy, but he was not changing his mind, stay long, he said.
Then I saw the chief market strategist from Evercore ISI interviewed. It seems they do a monthly survey of their clients. This strategist, who is not one of those perma-bull types, said he was shocked to see how bullish folks were in their latest survey.
I jotted down the numbers he said quickly, so I might have gotten something wrong, but he said this was the most bullish folks had been in their survey and that 76% believed the market would be higher six months from now. The prior high reading was in 2018, when that number was 69%. Recall we had a near 20% correction in 2018.
Note: If I have gotten this wrong, it’s because 76% was in 2018 and 69% is now. Either way, that’s pretty darn bullish.
His takeaway? So, we get a pullback that will be buyable!
I suppose they are all correct because unless/until the large market cap stocks roll over or correct, they manage to keep the S&P levitated. But to say that folks are not ‘all in’ is to delude yourself. The boat is full.
