Weekly Equity Sentiment Poll – 23 Jan 2017

Equity Sentiment Poll

Here’s a quick note looking at some charts created using data from the latest weekly equity sentiment poll I’ve been running.  As a reminder, the Weekly Equity Sentiment Poll uses Twitter polling and distinguishes between whether respondents are bullish or bearish primarily on the back of fundamental vs technical analysis reasons.

But first, a matter of milestones – this is the 30th week that the equity sentiment poll has been held now! So we’re starting to get a decent time series behind it which will help with drawing out insights and trends.

The regular chart comes first with the weekly poll results across the 4 options.  This week saw “bearish for fundamental reasons” rise to its highest point since September (likewise fundamental bullishness fell slightly).  On the other hand the technicals sentiment went in the opposite direction.

The next graph shows the S&P 500 compared to the fundamentals bull-bear spread.  I’ve previously pointed out how the fundamentals bull/bear spread seems to have a slight lead on market prices.  Thus it’s therefore an ominous sign that we see the fundamentals spread making a noticeable decline in recent weeks.  This could be a warning sign of an impending correction or selloff and technical analysts would call this bearish divergence.

Equity Sentiment Poll

If that one didn’t scare you then this one might, it shows the overall bulls vs bears difference against the CBOE VIX. There is an interesting divergence there with the bull-bear spread suggesting a VIX level more towards 16 than 11.  The main way that the VIX moves higher is by markets falling, so it’s definitely one to keep on the radar, 16 is not catastrophic but it would be consistent with a 5-10% correction.

Equity Sentiment Poll

Summary

The charts in this week’s Twitter equity sentiment poll show a couple of warning signs.  This tends to line up with some of the bearish signals I’ve been highlighting in the S&P500 #ChartStorm.  More broadly expectations have been bid up high, economic surprise indexes have gone to extremes, and stock market enthusiasm about Trump has been palpable.  At this point it would not take much at all to trigger a selloff.  Thus a short-term cautious bias for equity exposure seems warranted.

For exclusive info on hedge funds and the latest news from value investing world at only a few dollars a month check out ValueWalk Premium right here.

Multiple people interested? Check out our new corporate plan right here (We are currently offering a major discount)






About the Author

Top Down Charts
Topdown Charts: "chart driven macro insights" Based in Queenstown, New Zealand, Topdown Charts brings you independent research and analysis on global macro themes and trends. Topdown Charts covers multiple economies, markets, and asset classes with a distinct chart-driven focus. We are not bound by technical or fundamental dogma, and instead look to leverage any relevant factor to capture the theme. As such, here you will find some posts that are purely technical strategy, some that just cover economics and data, and some posts that use multiple inputs to tell the story and identify the opportunities. Callum Thomas Head of Research Callum is the founder of Topdown Charts. He previously worked in investment strategy and asset allocation at AMP Capital in the Multi-Asset division. Callum has a passion for global macro investing and has developed strong research and analytical expertise across economies and asset classes. Callum's approach is to utilise a blend of factors to inform the macro view.

Be the first to comment on "Weekly Equity Sentiment Poll – 23 Jan 2017"

Leave a comment