{"id":417473,"date":"2010-03-11T16:14:41","date_gmt":"2010-03-11T21:14:41","guid":{"rendered":"http:\/\/www.businessinsider.com\/the-sentiment-indicator-thats-warning-of-a-market-sell-off-2010-3"},"modified":"2010-03-11T16:14:41","modified_gmt":"2010-03-11T21:14:41","slug":"the-sentiment-indicator-thats-warning-of-a-market-sell-off","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/417473","title":{"rendered":"The Sentiment Indicator That&#8217;s Warning Of A Market Sell-Off"},"content":{"rendered":"<p><em>(This guest post originally appeared at the <a href=\"http:\/\/pragcap.com\/bullish-sentiment-surges-near-january-high\">author&#8217;s blog<\/a>)<\/em><\/p>\n<p>The <a href=\"http:\/\/pragcap.com\/3-near-term-risks-to-the-market\" >warning flags<\/a> continue to pop up all over the place and investors continue to run head first into stocks.&nbsp; None of the recent warning flags are as alarming as today&rsquo;s huge spike in individual investor sentiment.&nbsp; Small investor bullishness surged to <a href=\"http:\/\/pragcap.com\/bullish-sentiment-picks-up\" >45.3% versus last week <\/a>as the market continues to melt higher.&nbsp; This has served as a fairly reliable contrarian indicator in the past as small investors tend to pile into stocks near the end of rallies.<\/p>\n<p>Individual investor sentiment has reached levels that have historically been followed by very poor equity returns.&nbsp; A few of the notable periods when investor sentiment was this high include:<\/p>\n<ul>\n<li>A 50% reading prior to a 3 month 10% sell-off in Q2 2008<\/li>\n<li>A 45% reading prior to the 2008 market crash<\/li>\n<li>A 47% reading prior to the 20% sell-off to the March 2009 lows<\/li>\n<li>A 49% reading prior to the January 2010 sell-off<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/static.businessinsider.com\/image\/4b995c9d7f8b9a3125a00100-569-398\/chart.png\" border=\"0\" alt=\"chart\" width=\"569\" height=\"398\" \/><\/p>\n<p>No indicator is perfect and this one has certainly been excessively bullish at points during the 2009 rally, but it confirms the growing bullish trend that we saw in yesterday&rsquo;s Investors Intelligence poll where financial advisers increased bullishness to 44.9%.&nbsp;&nbsp; With institutional investors stacking up on the bullish side of the trade and now individual investors stacking up on the same side you just have to wonder &ndash; who is left to buy stocks?&nbsp;&nbsp; Better yet, who are they going to sell to?<\/p>\n<p><strong>Read more market commentary at <a href=\"http:\/\/pragcap.com\">The Pragmatic Capitalist &gt;<\/a><\/strong><\/p>\n<p><a href=\"http:\/\/www.businessinsider.com\/the-sentiment-indicator-thats-warning-of-a-market-sell-off-2010-3#comments\">Join the conversation about this story &#187;<\/a><\/p>\n<p><b>See Also:<\/b><\/p>\n<ul>\n<li><a href=\"http:\/\/www.businessinsider.com\/sentiment-fails-to-hold-up-2010-3\">Sentiment Fails To Hold Up<\/a><\/li>\n<li><a href=\"http:\/\/www.businessinsider.com\/citi-sentiment-wont-stop-crashing-2010-2\">Citi: Sentiment Won&#8217;t Stop Crashing And We&#8217;re Approaching 2009 Lows<\/a><\/li>\n<li><a href=\"http:\/\/www.businessinsider.com\/bullish-sentiment-plummets-to-levels-not-seen-since-march-09-2010-2\">Bullish Sentiment Plummets To Levels Not Seen Since March &#8217;09<\/a><\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/TheMoneyGame\/~4\/KXpVnYOn428\" height=\"1\" width=\"1\"\/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(This guest post originally appeared at the author&#8217;s blog) The warning flags continue to pop up all over the place and investors continue to run head first into stocks.&nbsp; None of the recent warning flags are as alarming as today&rsquo;s huge spike in individual investor sentiment.&nbsp; Small investor bullishness surged to 45.3% versus last week [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-417473","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/417473","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=417473"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/417473\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=417473"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=417473"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=417473"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}