Weekly Sentiment Poll – Potential For Vix Spike

Weekly Sentiment Poll – Potential For Vix Spike
This week we ran the sentiment poll for 2 days as the polling day fell on New Year’s eve/day. But we still got a similar number of respondents, and some interesting standouts in the results. As a reminder, theWeekly Equity Sentimentpoll usesTwitter polling and distinguishes between whether respondents are bullish or bearish primarily on the back of fundamental vs technical analysis reasons.
The firstchartshows the trends in the responses for each of the options, notably the latest results show bullish technical sentiment trading places with bearish technical sentiment, while fundamentals are doing the opposite.

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Next is a look against the S&P500, which shows the overall bull/bear spread falling back from quite optimistic levels seen around the recent highs (a contrarian bullish signal?).

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Interestingly the “fundamentals” bulls vs bears spread seems to have served as a leading indicator, e.g. falling prior to the low in November, and surging thereafter along with the Trump rally.

542496 1847f46eced645eda0e11bc7b367b71b~mv2

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And finally, if you invert the overall bulls vs bearssentimentspread you get a pretty good fit with the VIX or CBOE volatility index. It seems as though the indicator has worked as a leading indicator at times, which is interesting given the latest observation – is a VIX spike on the cards?

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Overall the pull-back in sentiment is probably a healthy one, and if the fundamentals bull-bear spread is anything to go by we could see higher prices from here. The complicating factor is that last chart which shows the potential for a VIX spike…
What are your thoughts? Feel free to add your comments below.
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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