US 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.

Sentiment Dashboard

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.

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