Weekly Sentiment Poll: Fundamentals

The latest weekly sentiment poll on Twitter showed a couple of very interesting trends in sentiment and markets. As a reminder the survey differentiates between “technicals” and “fundamentals” sentiment. The first point is the trend in the “fundamentals” net-bullish sentiment for bonds & equities. The chart below shows the 2 lines, first thing: bond fundamentals sentiment is basically negative the whole time (bearish fundamentals – note the bond line is inverted); likewise the equity fundamentals net-bullish sentiment is also negative the whole time (i.e. respondents were net-bearish on equity fundamentals).

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

But most important is the trend. The trend appears consistent for both (which makes sense: bond sentiment should most of the time be the mirror image of equities). That is, after trending down for most of this year, there has been a noticeable upturn in fundamentals sentiment for equities lately (and down for bonds).

The second chart shows a gap opening up again on overall net-bulls vs the VIX. This could be called a fear gap as sentiment appears to have overreacted vs the movement in the VIX. It could be a sign of things to come. But it could also just be a reflection of investor skittishness - it's taking smaller price movements to affect larger shifts in sentiment. An interesting combination given some of the signs we highlighted yesterday that stockmarket euphoria appears to be rising.

Michael Mauboussin: Challenges and Opportunities in Active Management And Using BAIT #MICUS

michael mauboussin, Credit Suisse, valuation and portfolio positioning, capital markets theory, competitive strategy analysis, decision making, skill versus luck, value investing, Legg Mason, The Success Equation, Think Twice: Harnessing the Power of Counterintuition, analysts, behavioral finance, More Than You Know: Finding Financial Wisdom in Unconventional Places, academics , valuewalkMichael Mauboussin's notes from his presentation at the 2020 Morningstar Investment Conference, held on September 16th and 17th. Q2 2020 hedge fund letters, conferences and more Michael Mauboussin: Challenges and Opportunities in Active Management Michael Mauboussin is Head of Consilient Research at Counterpoint Global in New York. Previously, he was Director of Research BlueMountain Capital, Read More


Fundamentals sentiment: both bonds and equities have net-bearish fundamentals sentiment, but there is a clear trend and that trend has gone from down to up.

The gap has opened up again between overall net-bulls and the VIX - call it a fear premium or a premonition of things to come, either way smaller price moves are seeing bigger sentiment reactions.

Fundamentals

For institutional grade insights on the global economics and asset allocation, and some more good charts you may want to subscribe to the Weekly Macro Themes. Click through for a free trial.

Follow us on:

LinkedIn https://www.linkedin.com/company/topdown-charts

Twitter http://www.twitter.com/topdowncharts

Article by Callum Thomas, Top Down Charts

Save