Best of the Week
Most Popular
1.War on Cash, Bank of England Planning Hyper QE, Scrapping Cash for Digital Currency - Nadeem_Walayat
2.Stock Market End Run Smash Crash Looks Imminent... - Clive_Maund
3.Europe Refugee Crisis, UK to Repatriate 120,000 Hungarian Economic Migrants Back to Hungary - Nadeem_Walayat
4.The Great Deflation Will Destroy All Bubbles – These Too - Harry_Dent
5.Deflation Signals Abound for U.S. Dollar, Forex Markets and Commodities - Rambus_Chartology
6.U.S. Housing Market Two Outs in The Bottom of The Ninth - James_Quinn
7.Poland, Czech, Slovakia and Hungary Refugee Hypocrisy After Flooding UK with 4 Million Economic Migrants - Nadeem_Walayat
8.The Two Real Reasons Crude Oil Prices Are Currently Slipping - Dr. Kent Moors
9.R.I.P. Interest Rates - Andrew Snyder
10.Steps from a Deep October Stock Market Selloff - Bob_Loukas
Last 5 days
A Key Oil Price Trend That Everyone Is Missing - 6th Oct 15
Stock Market Turn Appears to Have Been Made - 6th Oct 15
Designing a Dividend Growth Portfolio for a Specific Retirement Yield Objective - 6th Oct 15
Peter Schiff Predicts Gold Price Breakout - Video - 6th Oct 15
Theresa May Declares War on Immigration - Conference Speech Full Transcript - 6th Oct 15
Is Russia Plotting To Bring Down OPEC? - 6th Oct 15
Target Date Funds As Aid In Retirement Investment Portfolio Design - 6th Oct 15
Stocks Bear Market Apocalypse Imminent Crash Gets Nuked Again - 6th Oct 15
Redesigning Internet and Facebook to Explore Their Full Potentialities... - 5th Oct 15
Nightshades Curb Your Enthusiasm - 5th Oct 15
U.S. Recession Watch, High-Yield – Rising Defaults - 5th Oct 15
The Social Challenge to Find Humanity in Capitalism - 5th Oct 15
Fed Interest Rate Hike: "I don't care. It doesn't really make much of a difference" - 5th Oct 15
Gold Rose 2.2%, Silver Surged 5.4% After Poor Jobs Number On Friday - 5th Oct 15
Gold, Silver Precious Metals: a Critical Week Ahead - 5th Oct 15
Stock Market Correction Still in Force - 5th Oct 15
Gold Price Change in Character - 5th Oct 15
Putin’s Blitz Leaves Washington Rankled and Confused - 4th Oct 15
More Selling for Stock Market, Gold? - 4th Oct 15
Gold And Silver – A Reality Check - 3rd Oct 15
Stock Market Primary IV Still, or Primary V Underway? - 3rd Oct 15
The Oil Industry’s Day of Reckoning - 3rd Oct 15
U.S. Interest Rate Hikes Keep On Slippin' Into the Future; Treasury Yields Sink Again - 3rd Oct 15
China's Stock Market Crashing; Time for Panic or Restraint - 3rd Oct 15
SPX Stocks Bulls Struggle to Regain the Upper hand... - 2nd Oct 15
The Two Faces of Stock Market Volatility - 2nd Oct 15
Money Supply and the Fed’s Serious Inflation Risks - 2nd Oct 15
Stock Market How Bad Can This Get, And How Fast? - 2nd Oct 15
A Worrying Set Of Recession Signals - 2nd Oct 15
Negative Jobs Report Sents SPX, TNX Lower - 2nd Oct 15
Don't be Fooled by the Recent Equity market Rallies. Its a Bear Market, Stupid! - 2nd Oct 15
US Bond Market - How to Fix This - 2nd Oct 15
Survival Secrets from Colorado Resource Investing Front Lines - 2nd Oct 15
What Two Risks From Rising Interest-Rates Could Each Trigger A New Global Crisis? - 1st Oct 15
Stock Market S&P 500 Volatility-Based Price Probability Range - 1st Oct 15
Dow Stock Market About To Crash Like October 1929? Get Your Physical Silver - 1st Oct 15
Stock Market Negative Expectations Once Again - Will It Break Down? - 1st Oct 15
Advice for Biotech Investors: 'Hold Your Powder' 'til Winter - 1st Oct 15
Best Short-Term Commodity Market Opportunities - Video - 1st Oct 15

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

Contrarian Sentiment Indicator Says Stock Markets Have Bottomed

Stock-Markets / Stock Market Sentiment Nov 23, 2012 - 10:17 AM GMT

By: DailyWealth


Dr. Steve Sjuggerud writes: Over the last decade, this idea has been "a perfect contrary indicator," my friend Jason Goepfert explained on Monday.

Jason runs the excellent SentimenTrader website – my go-to site for all things "sentiment."

When this indicator has signaled in the past, it's delivered incredible returns in the next two months. (There's only been one exception.) And it just signaled again.

Before I tell you about its specific results, let me show you why it works...

To me, investor sentiment is the most useful way of determining when a market will bottom. Measuring sentiment is more art than science – but Jason has made it as scientific as possible.

Investor sentiment data is most useful – by far – when it is at extremes. The basic idea is this:

When EVERYONE is scared and has sold, it's almost time to buy.

Sentiment indicators are "contrary" indicators because you're buying when fear is at its peak. And right now, according to this particular indicator, one important group of investors is extremely scared... newsletter writers!

It turns out newsletter writers are good contrary indicators. When they are all telling their readers to sell, it's almost time to buy.

Importantly, according to one of Jason's indicators, newsletter writers are really scared. It's time to buy.

I can't divulge the specifics of the indicator (it wouldn't be fair to Jason's paying subscribers). But over the last 10 years, it's had a nearly perfect track record, with 2008 as the only exception. As Jason explained on his website on November 19...

Of the 17 weeks during the other nine years, the S&P sported a positive return over the next two months every time, averaging 4.8%-plus.

The market tended to bottom right away – the maximum loss averaged only -0.1% while the maximum gain averaged 7.3%-plus.

So far, Jason's indicator has been exactly right... After falling for six-straight weeks, the Nasdaq stock index is up again, right on cue, following this latest signal.

I published the latest issue of my True Wealth newsletter last Friday. I didn't have the benefit of this indicator to go on... but I fully agree with Jason. Here's what I wrote:

While the stock market has really taken it on the chin in the last month, I'm still positive... We've just gone through a small correction. Based on investor sentiment numbers, I think we're through the worst of it. Investors are no longer overly optimistic... This is a small correction in the great Bernanke Asset Bubble.

I stand behind my analysis... And Jason's indicator is one more confirmation that this correction in stocks is over.

Trade accordingly...

Good investing,


P.S. "Since the 2009 market bottom," Jason explains, "the indicator has reached this extreme three times, and all three were perfect inflection points." For more on Jason's work – and the other important indicators he uses to track sentiment – visit his site at (We get no compensation for mentioning SentimenTrader.)

The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2011 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Daily Wealth Archive

© 2005-2015 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Biggest Debt Bomb in History