To close out the trading week, let’s look at a chart that tells us a bit about where investors’ heads are at.
Chart of the Day
This is the American Association of Individual Investors weekly market sentiment chart.
And as you can see, bullish sentiment fell steadily throughout the month, from 47.3% on April 3 to 32.1% on April 24.
Meanwhile bearish sentiment increased from 22.2% to 33.9% over the same period.
Many would look at this as a negative.
But for me, it’s a good sign. I explain why in the Insight of the Day below.
Insight of the Day
Using sentiment to gauge when the market might shift is counterintuitive as sentiment is a lagging indicator.
At the end of March, bullish sentiment was at 50% according to the above chart – almost a 52-week high.
Right after, the market fell.
Similarly, at the beginning of November last year, bearish sentiment also peaked at 50% – right before the market surged.
The market moves first, sentiment follows after.
That’s why I like seeing the bullish sentiment falling fast – because it likely means the pullback ending sooner rather than later.
And that’s also why now is the time to get in position in a select group of stocks…
Stocks that could rise the fastest when – or even before – the pullback ends.
Here’s what you need to know to find these stocks.
Embrace the surge,
Ross Givens
Editor, Stock Surge Daily
