Best of the Week
Most Popular
1.UK General Election BBC Exit Polls Forecast Accuracy - Nadeem_Walayat
2.UK General Election 2017 Seats Final Forecast, Labour, Conservative Lib-Dem, SNP - Nadeem_Walayat
3.UK General Election 2017 Forecast: Conservative 358, Labour 212 Seats - Nadeem_Walayat
4.Theresa May to Resign, Fatal Error Was to Believe Worthless Opinion Polls! - Nadeem_Walayat
5.UK House Prices Forecast General Election 2017 Conservative Seats Result - Nadeem_Walayat
6.The Stock Market Crash of 2017 That Never Was But Could it Still Come to Pass? - Sol_Palha
7.[TRADE ALERT] Write This Gold Stock Ticker Down Now - WallStreetNation
8.UK General Election Results Map 2017 vs 2015 vs Opinion Polls - Nadeem_Walayat
9.Orphaned Poisoned Waters,Severe Chronic Water Shortage Imminent - Richard_Mills
10.How The Smart Money Is Playing The Lithium Boom - OilPrice_Com
Last 7 days
Gold Back With A Vengeance As Bitcoin Bubble Bursts - 26th Jun 17
Crude Oil Trade & Nasdaq QQQ Update - 26th Jun 17
Gold and Silver Ongoing Consolidation May End Soon - 25th Jun 17
Dollar May Become “Local Currency of the U.S.” Only - 25th Jun 17
Sheffield Great Flood of 2007, 10 Years On - Unique Timeline of What Happened - 24th Jun 17
US Stock Market Correction Could be Underway - 24th Jun 17
Proof That This Economic Recovery Narrative is False - 24th Jun 17
Best Cash ISA for Soaring Inflation, Kent Reliance Illustrates the Great ISA Rip Off - 24th Jun 17
Gold Summer Doldrums - 23rd Jun 17
Hedgers Net Short the Euro, US Market Rotates; 2 Horsemen Set to Ride? - 23rd Jun 17
Nether Edge By Election Result: Labour Win Sheffield City Council Seat by 132 Votes - 23rd Jun 17
Grenfell Fire: 600 of 4000 Tower Blocks Ticking Time Bomb Death Traps! - 22nd Jun 17
Car Sales About To Go Over The Cliff - 22nd Jun 17
LOG 0.786 support in CRUDE OIL and COCOA - 22nd Jun 17
More Stock Market Fluctuations Along New Record Highs - 22nd Jun 17
Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - 22nd Jun 17
Green Party Could Control Sheffield City Council Balance of Power Local Election 2018 - 22nd Jun 17
Ratio Combo Charts : Hidden Clues to the Gold Market Puzzle - 22nd Jun 17
Steem Hard Forks & Now People Are Making Even More Money On Blockchain Steemit - 22nd Jun 17
4 Steps for Comparing Binary Options Providers - 22nd Jun 17
Nether Edge & Sharrow By-Election, Will Labour Lose Safe Council Seat, Sheffield? - 21st Jun 17
Stock Market SPX Making New Lows - 21st Jun 17
Your Future Wealth Depends on what You Decide to Keep and Invest in Now - 21st Jun 17
Either Bitcoin Will Fail OR Bitcoin Is A Government Invention Meant To Enslave... - 21st Jun 17
Strength in Gold and Silver Mining Stocks and Its Implications - 21st Jun 17
Inflation is No Longer in Stealth Mode - 21st Jun 17
CRUDE OIL UPDATE- “0.30 risk is cheap for changing implication!” - 20th Jun 17
Crude Oil Verifies Price Breakdown – Or Is It Something More? - 20th Jun 17
Trump Backs ISIS As He Pushes US Onto Brink of World War III With Russia - 20th Jun 17
Most Popular Auto Trading Tools for trading with Stock Markets - 20th Jun 17
GDXJ Gold Stocks Massacre: The Aftermath - 20th Jun 17
Why Walkers Crisps Pay Packet Promotion is RUBBISH! - 20th Jun 17

Market Oracle FREE Newsletter

The MRI 3D Report

Contrarian Sentiment Indicator Says Stock Markets Have Bottomed

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

By: DailyWealth

Stock-Markets

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,

Steve

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 www.SentimenTrader.com. (We get no compensation for mentioning SentimenTrader.)

http://www.dailywealth.com

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

© 2005-2017 http://www.MarketOracle.co.uk - 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

Catching a Falling Financial Knife