Some traditional and proprietary sentiment measures are near buying lows and others are near selling highs. The intelligent amateur internet trading sites seem polarized more than normal between the crash-of-the-month crowd and the to-the-moon crowd.
If I had to choose sides I'd go with with the latter group because the news has been depressing my entire life as it is now, and I see some smart people buying.
As described in the article below, one doesn't have to choose sides if one learns how to manage a portfolio. But there are also some intermediate term data which support the bullish case. The official and legal US commercial hedgers of stock portfolios are covering their natural and habitual shorts. These folks are insurance companies, bank trust departments, mutual funds, pension funds and all those like them who manage or self-invest in stocks for a profit or underwrite them. There are only about 200 of these "big boys" around the world recognized by the CFTC as true commercial or trade hedgers in US stock index futures. As such they qualify for very low margin deposit rates for hedging short or long, and they are required to identify exactly what they are hedging in order to qualify.
On January 31 they were net short an amount of stock index futures equivalent to 102,000 SP futures contracts. In dollars that is 102,000 times $250 times 1300 they were short against their long positions. That's a good bit of bearishness. As of this past week they have reduced those shorts in a big way to -58,000 SP futures equivalents (combining all contracts as George Slezak does).
The Dow 30 was higher this past week on Tuesday (reporting day) than it was on January 31, and these folks normally short more at higher prices, not cover shorts. So something is making them more comfortable being long their stocks. I don't know what this factor is that is making them cover almost half their short hedges--they always have some-- but I believe they are smarter, or at least better informed, than I am. They have to be, given who they are and where they are. And they are usually right, even if not immediately.
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