Monday, September 20, 2010

Historical data

We want to highlight - again and again - a very unique situation in our current data set. We spot a new all time high in the medium-term sentiment. That means that investors are recognizing a positive valuation for equities.


US Equitiy sentiment - medium-term © sentix

Is this a negative? We don't think so because investment positions are relatively low (approx 1 standard deviation below average). We expect the market to break on the upside.

That would leave investors in an uncomfortable position as they have "seen" the chance but missed the entry. We have to see how quick investor may act if the break occurs. The chances are that they act slowly as markets already have performed for some weeks now and investors may wait for a correction.

For a complete analysis and all charts take a look at http://www.sentix.de/
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2 comments:

  1. D4yw41k3rSeptember 21, 2010 at 10:48 AM

    What I do not understand, in your analysis from Monday you write about the cognitive dissonance of investors between 6M-sentiment and investment positions. This dissonance will be unlikely solved by new buys at new market highs, you write and the information a reader gains from this will be worth gold. Well, I don't get it. ;-/ What do you mean?

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  2. Woolly thoughts (by sentix)September 23, 2010 at 8:15 AM

    Dissonance occurs because investor are optimistic but not invested. If then the market makes a break to new highs investors might be regretful. Dissonance can only be resolved by acceptance and in that case acceptance means buying.

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