Over on Columnist Conversations, Real Money's James Gentile has a note headlined "Near-Universal Bearishness." I can understand why he has that impression but over the last few years I have found it nearly impossible to navigate this market based on sentiment.
Sentiment just doesn't seem to operate like it used to. It seldom seems like we have extremes in either fear or euphoria. Rallies are always "hated" and pullbacks are always bought. The great fear is fear of underperformance rather than losses.
Is bearishness excessive right now? I don't see many signs of panic or fear but those things just don't happen that often. We are always backstopped by the central bankers so there isn't anything to worry about. Everyone knows they will ride to the rescue again if things really start to look ugly.
What I know now is that the indices have rolled over and are at the edge of falling into a correction. But has it become so negative that we are due for a snap back? I don't think so, but this market hasn't needed excessive negativity to bounce. Bounces are routine and automatic regardless of sentiment.
As a trend-following trader, however, I am bowing to the fact that the trend is turning down. That means selling positions and raising cash. I am looking for some buys in the gold sector again such as DRDGOLD (DRD) but I'm moving incrementally.