Investment Advisor sentiment tests late-October 2023 low
Nasdaq edges up, S&P 500 ~flat, Dow slips
Comm Svcs leads S&P 500 sector gainers; Real Est weakest group
Euro STOXX 600 index up ~0.8%; ECB cuts deposit rate by 25 bps
Dollar dips; bitcoin ~flat; gold up >1%; crude gains >3%
U.S. 10-Year Treasury yield rises to ~3.68%
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INVESTMENT ADVISOR SENTIMENT TESTS OCTOBER 2023 LOW
The American Association of Individual investors (AAII) produces a weekly survey of stock market sentiment among its members. The survey is widely used as a contrarian indicator.
Last week, AAII reported that neutral sentiment, or the belief that stock prices will stay essentially unchanged over the next six months, jumped.
Investors Intelligence (II), a global investment service, also releases a weekly sentiment survey which is also closely followed, and, at extremes, may also be useful as a contrarian measure of sentiment.
II, however, surveys independent market newsletter writers and assesses each author's current view on the market: bullish, bearish, or correction.
According to the most recent II data, 43.5% of investment advisors are bullish, while 22.6% of advisors are bearish. The percentage of advisors expecting a correction is 33.9%. Thus, 56.5% of advisors are, in some way shape or form, negative on the market.
Therefore, the spread between bulls and bears plus those in the correction camp is -13%:
That's flat with the prior week's read, which was the lowest level since a -14.2% print in late October 2023. Back then, the S&P 500 index .SPX was putting in the bottom to its July-October 2023 selloff of 10.3% on a closing basis.
Last Friday, the SPX ended down 4.6% from its July record close, before this week's recovery so far.
In any event, if this spread can begin to recover and reclaim its zero-line, it may suggest the worst has passed in terms of the level of advisor concern over the market's prospects.
If the spread continues to fall deeper into negative territory, it can suggest intensifying fear among advisors, which would likely coincide with greater S&P 500 weakness.
Of note, spread troughs in December 2018 and March 2020 were at -40.2% and -39.8%. The October 2022 low was at -50%.
(Terence Gabriel)
*****
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TECH STOCKS CUE RALLY WHILE ECB LOOMS - CLICK HERE
II09122024 https://tmsnrt.rs/4gn91OT
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
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