The bags have returned to pay to the red this week. The market has not taken long to find guilty of this severe correction. The Fed and fear of a flare-up were the most obvious. But they are not. "This is the true reason for the falls and should not surprise anyone."
It says Mark Hulbert, one of the gurus and columnists of MarketWatch. In his last article he refers to the HSNSI, the Sentiment Index of the Hulbert Stock Bulletin.
"Consider the recommended average exposure level in the stock market among the several dozen short-term stock market indicators that I monitor on a daily basis," argues Hulbert. This level of exposure is reflected in the aforementioned HSNSI.
"Earlier this week, the index rose to 62.5% entering just the zone of extreme bullish optimism ", keep going. "The usual pattern indicates that once the HSNSI rises to these levels, it drops again abruptly," he says.
WHEN WILL THE REBOUND COME?
"It is difficult to predict how much the market should fall from here for this indicator to be in a zone of extreme bearish pessimism: it may be only a few days of volatility or it may take longer," Hulbert weighs. "Without a doubt, it is going to be a long summer for equity investors," he predicts.
"Unfortunately for them, the short-term market indicators are not going to change to support further increases until there is a lot of skepticism," explains the guru and analyst.. "Thursday's crash has started that process, but there is still a long way to go"Apostille.
The sharp falls this week have been music to the ears of those investors who missed the rally at first. Now, they see before them a new opportunity to buy and to get on the train. Those who won't be so easy to convince are some legendary investors, like David Tepper or Warren Buffett, who have recently starred in a stock market leak by wearing shorts and betting against it.