Daniel GrioliUS Equities Sentiment Update Mid-August 2019
Sentiment has weakened considerably over the last week (as at 14/8/2019) and is now on its way towards pessimism - a positive buy signal.
Sentiment is one of seven indicators in Guiscard Capital's asset allocation framework. Any change to the asset allocation will be driven by the total score, not a single indicator.
Here's an explanation of the charts from top to bottom:
S&P 500's short-term trend S&P 500 has turned down. the index currently sits below its 50-day moving average (blue line). The index remains above its long-term trend (200-day moving average).
Recommended stock allocation of over 200 NAAIM advisors fell from over 90% at the beginning of August (over-optimism) to 57% now (signs of pessimism). This is starting to look positive.
Rydex Bear vs Bull fund ratio. A rising line = more money going into bear funds, a sign of increasing pessimism. This is positive.
AAII Survey of retail investors. The chart shows Bulls minus Bears (and ignores undecided voters). Bears are firmly on top. This is positive.
VIX is higher than recent weeks as investors have become less complacent. This is positive.
10-day average Put/Call ratio is over 1, suggesting that the bears are in the ascendancy. This is also a good sign.