According to the bank’s latest strategy note, “sentiment plays an important role in the formation of equity”. Hence, the bank analyzes the current mood of investors in the following graphs, saying that the current rally is most likely to be stalled by “excessively bullish short-term sentiment”… however, “sentiment is really useful at extremes and we are not there yet”. Will the market keep up with the current trend?

Short-term sentiment is now above average, although not yet high enough to give a convincing case for a decline in stocks…

According to this indicator, the current bullish trend has legs, though it is weakening and getting toppish… when the sentiment reading is ‘low’, it tends to be followed by higher average returns; the reverse is true when sentiment is high…

Tagged with:  
Share →