THE GREAT SENTIMENT TRANSFORMATION

U.S. indices finally turned into green and finished the week with modest gains. The two-day rally helped indices break the losing streak. The DJIA gained 0.6% over the past week. SP500 recorded a 0.8% weekly gain after three straight losing weeks. The European stocks moved higher too and Asia shows strength and they broadly stay higher this morning.

• Dow 15,794, +165, 1.06% 
• Nasdaq 4,126, +69, 1.70% 
• S&P 500 1,797, +24, 1.33%

After a long period of correction the investor’s sentiment has turned around. Beginning of the year everybody was in euphoria. But I am really scared when no one seems to be worried about anything. Finally, the picture is different, which is a good sign for possible market gain.

In the beginning of 2014 the bullish sentiment rose to its highest levels since January 2011 (55%). Recently after six weeks of market correction - according to AAII Sentiment Survey – bullish sentiment declined to 27.90% last week. This is the lowest bullish sentiment since April 2013. The optimism is not with us anymore.



In another survey we could see the same pattern. The Marketwatch made a survey which says the followings:

• The correction is over: 30,7%
• Is not yet over: 45,9%
• Not sure about: 23,4%

http://blogs.marketwatch.com/thetell/2014/02/07/poll-is-the-stock-market-correction-already-over/

All in all. The investors have fears now which I like. Without that fear the market couldn’t gain further. So we really needed this change of sentiment and our bet is the market goes back again into the bullish trend and will go up to new highs again.

The BFM Assets Team.