We noted last week that bullish sentiment had peaked in the beginning of August, just as the market was peaking. We said we wanted to see a little bit of fear come back into the market and that it has over the month. Funny how optimism peaks at tops and bottoms at the bottom! Now, if you were a “trader” playing the minor ups and downs in the market, you could probably take advantage of that to some degree. But as an investor, we call those “wiggles”.
We don’t pretend to pay attention to the “wiggles,” as we know that 5%-ish pullbacks in the market are normal and should happen several times per year. Not anything that we think is worth the time to try and guess at. We understand that others may disagree or have alternative strategies, and that’s what makes a market. For us and our clients we are longer-term investors who have years, if not decades, of time on our investment horizon. It would seem silly to trade daily/weekly signals for a yearly/decade horizon.
So here we sit, the bulls have been chased away and the bears have come out of hibernation, at least in the short run. And that’s a good thing. Let’s take a quick look at those sentiment indicators.
Bears now outnumber Bulls!
Meanwhile, the Fear and Greed index is back to Neutral. Down from Extreme Greed at the beginning of August.
Oh, and look at a couple things that just happened. I know you think I’m always negative (and I am about some things, like the FED), but these are interesting positives that may have escaped your purview.
The Leading Economic Indicators turned up in July! We’ve been talking about green shoots. Could this be our green shoots actually turning into a forest?
And how about this that just happened yesterday.
Not that I expect you to know what this means (unless you are steeped in technical analysis), but when the black line crosses the red line after it’s been down for a while, that’s a good thing!
Against all odds and over $5 trillion sitting in Money market, the stock market actually looks pretty good to us. In fact, here’s a chart that shows what usually happens after interest rates peak. Those that have money sitting in money market because it’s “safe” will likely be wishing they had a different plan for that money.
Granted, rates may not have peaked just yet, but it’s likely quite close. When the FED realizes they have raised rates too far and slowed things down more than they needed to, those short-term rates will come down (likely in a hurry). As you know, we have been saying ENOUGH ALREADY! I think this link says it all, click here.
Finally, as we are looking forward to the start of the NFL season, we are also coming to the end of the MLB season. I will point out for the casual or not fan, there is about to be something that has never happened before in Major League Baseball.
He needs one more home run, and the Braves are playing in Colorado in the one of the easiest stadiums to hit a round tripper. At the rate he’s going, he will likely be the charter member of the 30 HR and 70 stolen bases club this season as well. We wish him luck.
Enough of my drivel. I hope you have a great week, it’s the last “official” week of summer and kids are either already back in school are will be after Labor Day. Which reminds me, have a great Labor Day! As you might expect, the markets and our offices will be closed on Monday…so reach out soon if you need money moved around that time.