THE SENTIMENT IS MORE BEARISH

After many-many weeks finally the investors turned into bearish mood, which is a good buying signal. Why? Cause if everybody is bullish who is left to buy. The best sentiment survey is the weekly AAII Investor Sentiment Survey which measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market for the next six months. http://www.aaii.com/SentimentSurvey?a=nmupdate041014side

Now they are more sceptical about the bullish upside and they turned part of them bearish. The bullish level came down from 55% (2013 December) under 30% by now, which is a significant drop and when is under 30% was always a really bargain price to buy the S&P500.

This year first time happens that drops the bullish sentiment, so we do hope finally the market will make a nice rally in short term. Since this sentiment indicator in short term is a very effective contrarian indicator, so we have to do the opposite what the mass does.

In most cases when the investors are concerned and step aside or sell the market the market does the opposite and heading north. Let’s see the next week, but we are expecting after the very volatile days some direct moves up. The market and investors are pretty nervous and show the one day red one day green pattern. One day goes up the market and the following day deletes the gain. That is the folklore now, like on this DJIA chart.

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The BFM Assets Team.