Sentiment Survey: Panic

This article reviews the latest weekly sentiment survey we conduct over on Twitter.  The survey measures respondents’ equity and bond positioning/view – differentiating between whether the view is bullish or bearish for technical or fundamental reasoning.  The results show a clear and sharp shift in equity sentiment to the bearish side.  The move is primarily driven by technicals sentiment, and was largely mirrored in the bond survey.
At first glance it looks like a classic selloff and you could argue that the sentiment readings look “oversold”.  But obviously the North Korea saber rattling was a big driver.  I suspect that this would be reflected in the fundamentals sentiment, yet it is technicals sentiment that has moved the most.  A separate poll I’ve launched gauges how people are approaching the new week, and so far people seem to be erring on the bullish side or plan “buy the dip” as it seems the bluster traded between Trump and North Korea looks to be more hype than high probability event risk.  Overall, I’d say while the current selloff could go further, it’s going to need more headlines and more than hype to get too carried away.

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The overall net-bulls (total bullish sentiment minus total bearish sentiment) dropped sharply on the week, and is around previous levels when we saw minor selloffs/corrections.

Equity fundamental net-bulls are holding up so far, while the drop in overall sentiment is being driven by technical sentiment. At first glance at these charts it looks like the selloff could be short-lived.

I previously highlighted the upturn in "fundamentals" sentiment, yet the latest data show a turn on both the bonds and equities fundamental net-bulls. This will be one to keep an eye on.

technicals sentiment

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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.

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