SENTIMENT TRADER says up & away:
Survey says…buy!
Near the end of December, pessimism was hitting its practical maximum in some of our indicators and models, including the AIM Model of surveys. It has fully recovered since then, and will rise to 80% this week, the highest since early 2018.
Like many other studies that look at a fully cycle of sentiment, this one shows relatively weak returns in the medium-term, but fairly strong ones longer-term.
Good times
More than 200 junk bonds set a 52-week high than set a 52-week low this week, the most in two years. Since the recovery from the financial crisis, the high-low differential has been this positive on only 40 total days. According to the Backtest Engine, funds like HYG struggled a bit over the next couple of weeks.
Optimistic money managers
According to the NAAIM survey of active investment managers, the average manager is more than 90% exposed to stocks. This is not your typical contrary survey, though. When managers were more than 90% for the first time in at least four months, two months later the S&P 500 was higher 6 out of 6 times.
LOL.... So did Jason buy and add to his current position?