sentiment remains extremely bearish, what does that mean for the coming months?
April 12, 2009
– Comments (8)
Sentiment on the web remains extremely bearish, extremely bearish. I've spent alot of time reading CAPs this weekend, and by a loose count bearish entries must outnumber bullish ones 5:1. In fact, severely bearish commentaries remain basically the norm, and extremely bullish commentaries practically don't exist.
The bulls are cautious. They offer that they aren't sure what the future holds, that taking profits might make sense, that while tomorrow might bring a downturn, stock A or stock B are cheap enough to be a good long term buy. They offer that their horizon is long term.
The bears are aggressive. They KNOW that things are going lower than ever, they KNOW that society faces wild unprecedented problems, they KNOW the banks making money is a lie, they KNOW anybody long is gullible stupid a moron or worse. They are CERTAIN, they are vigilant or even militant, and they are comforted by the saftey of numbers. They remain the majority, which must fuel the fires of their bearishness. And they talk about the "wild bullish sentiment" and about how things "have gotten so bullish". Where? What posts are aggressively bullish? I can't see it. I can't really find even one.
By far, CAPs remains bearish. Taking the common logic that sentiment is a counter-indicator, this would imply that the markets might have room to move even higher in the coming days, weeks, or months.
I spent a couple of hours this evening reading articles and threads on seeking alpha. They are similarly bearish. I did not encounter a comment that read something like "this sucker is going to 900 by may, 1000 by july, get on now or miss out" . I did encounter confident bearish remarks.
I don't claim to have read every post on caps or on seeking alpha, and I don't claim to know what the short term direction of the market wlil be. I, personally, am long but hedged and cautious.
So sentiment is still bearish, easily. And yet here we are, vastly off the bottoms. Is the still-prevailing bearish sentiment an indicator that this rally might have more room to run than most of us would believe? Or is it an indicator that the market is braced to tumble on any hint of bad news?
Time of course will tell, and whoever's leaning was right will claim to have known all along. I for one, claim only to not know. But, as I always say,
good luck to all longs!
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