Weekly Sentiment Poll – An interesting divergence or disconnect

Weekly Sentiment Poll – An interesting divergence or disconnect

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, theWeekly Equity Sentiment PollusesTwitter pollingand distinguishes between whether respondents are bullish or bearish primarily on the back of fundamental vs technical analysis reasons.

The below chart tracks the weekly response across the past 31 weeks. There was little notable change on the week – the trend of less bullish on fundamentals + more bearish on fundamentals persisted. There seems to be some indecision on technicals though.

The next graph shows the overall bullish vs bearish sentiment spread against the S&P500 and it looks like it has bottomed out as price has moved gradually higher.

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On the other hand the chart showing the CBOE VIX index against the overall bull-bear spread (inverted) continues to show an interesting divergence or disconnect.  In essence this is a battle between a market driven measure of sentiment and a survey based measure of sentiment. I would suspect this gap will close, and probably soon.

The charts in this week’s Twitter equity sentiment poll present some mixed signals, but perhaps the strongest signal is the gap between the VIX and the bull/bear spread.  Sentiment could easily adjust (get more bullish) to line up with the VIX, but I think more likely would be a rise in the VIX from these very low levels.  This tends to line up with some of the bearish signals I’ve been highlighting in theS&P500 #ChartStorm.  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.
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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.

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