Key Indicator Flashes Rare ‘Buy’ Signal. But There Are Caveats
For the first time since the depths of the original pandemic selloff, a widely-cited indicator of market sentiment flashed a rare green light.
But there are caveats. Quite a few of them, actually.
After teetering on the brink of "extreme bearish" territory for weeks, BofA's Bull & Bear Indicator triggered just the ninth contrarian "buy" signal in nine years (figure below).
The dip below 2 (the threshold) came as fund manager cash levels surged to the highest since Lehman, while equity f
Wait, what are the “Three P’s” then?
Pessimism, positioning, and policy?
Positioning, profits, policy.
This looks like a short-ish term trading indicator. It flashes “buy” about once a year on average; looking at down market periods, it is more often than that. The returns are measured over a short time, 1 to 3 months.
Is it plausible that the SP500 will return positive over the next 1, 2 or 3 months? Sure, maybe. Estimates are still going up, 1Q earnings should be ok, consumers who have money are gearing up for a Covid-free (they think) spring, no Fed action for two months, the war could (likely) end soon-ish, etc.
Then we’re in May.