Trader’s Narrative

Although I’ve been dying to know what the sentiment survey reactions are to the recent market swoon, only one result has come in so far. All the other ones are still showing sentiment as it was just prior to the decline.

The one exception is LowRisk, which is very murky and jittery. Murky because no one know really much about it (who votes, how many vote, etc.) and jittery because it is the most volatile sentiment measure zipping from one extreme to another. The last time I featured it, it was at a historic bearishness. Which according to contrarian thinking was bullish for the market.

Bearish… So Bullish
Right now LowRisk’s most recent survey came in at only 23% bullish and 67% bearish (the rest neutral). Although this isn’t extreme, it is comfortably within levels which contrarians would interpret as bullish for the market.

LowRisk survey submitters, whoever and howmany ever of them there are, got spooked by the market’s decline and turned tail. That’s good because it means that there is fear in the air. If they hadn’t batted an eyelash, I’d be really scared!

LowRisk’s median guess for the Dow closing value on Friday, August 10th was 13477 (it was 14003 last week). To see a similarly low reading we’d have to go back to mid-June (13500).

There are many other sentiment indicators still to come in. Investor’s Intelligence was suppose to have been released this morning but I haven’t gotten it yet. I’m curious to see this one because of all the sentiment surveys it was the most bullish (and therefore bearish according to contrarian thinking)

My hunch is that there will be real fear reflected in the rest of the surveys as well, although not the sort of capitulation panic we saw at the bottom of the bear market. After all, we are not in the same scenario now as back then.