As a contrarian, I'm always looking for extreme indicators that go against the herd's behaviour. Here are a few most notable ones we are seeing currently:
- Extreme negative sentiment
- Bearish portfolio positioning
- Higher levels of cash holdings by fund managers
- Dumb money is bearish
- Put/Call ratios are offsides
- Number of stocks trading at 52-week lows.
This kind of extreme sentiment is at levels usually seen near market bottoms, especially when seen with a cluster. As such, I'd like to bet we are going to see a somewhat strong relief rally soon, probably as soon as tomorrow following the FOMC interest rate hike.
Another clue that supports this view is the TA setup for the Junk Bonds. See below the positive divergences for HYG
HYG has been crushed this year but its momentum is strengthening up lately, implying a turnaround is probably in the corner. HYG typically leads the market by a few days to two weeks. So a turnaround junk bond fund will be a bullish indicator for the general market. 🤗
No comments:
Post a Comment