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Stock Timing Newsletters Abandon Market at Trader’s Narrative

Stock Timing Newsletters Abandon Market

mark hulbertAccording to the Hulbert Financial Digest, stock timing newsletter editors en masse abandoned the market as the October highs melted into November losses.

Back in October, as the market was making a swing high, newsletters recommended an average exposure of +50% - that is, an allocation of 50% of a portfolio to the long side.

Last week, as both November and the market swoon ended, the editors had jumped ship and were actually suggesting an exposure of -13% - an allocation of 13% of a portfolio to the short side.

Although this is not the most extreme short allocation and sentiment has recovered somewhat since then, the way that they jumped so fast from a bullish stance to a bearish one, is telling from a contrarian point of view.

Had the decline been met with disbelief, or worse, an increase in bullishness, then I would be really worried. But sentiment agrees with the other technical data and we are already seeing a recovery, as I thought we would.

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2 Responses to “Stock Timing Newsletters Abandon Market”  

  1. 1 Aaron

    The fact that the newsletters were very negative on the market during that period aren’t surprising to me, but the negative 13% is quite an astounding number. Definitely a good contrarian indicator.

  2. 2 Babak

    well, to be fair, the -13% isn’t nearly as pessimistic as this bunch can get. But for the smallish correction we’ve had it can be seen as a knee-jerk reaction… or over reaction.

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