Having followed the investment newsletter complex for decades, Mark Hulbert has substantial data at his disposal to determine the sentiment of this faction of the investment community.
Hulbert reported this week that his Hulbert Stock Newsletter Sentiment Index (HSNSI) average recommended equity allocation of a subset of the shortest term market timers had risen to 47.6% from 22.7% late last week.
Particularly disturbing is that the HSNSI is now higher than where it stood on May 1, when the bull market that began in March 2009 hit what so far is its highest closing level. It’s five percentage points higher, in fact, even though the Dow is more than 400 points lower today than then.
This development makes Hulbert skeptical of any stock market rally that may ensue from here.
The HSNSI flashed a cautionary reading back in November 2010 [link]. The market dropped about 3% the following week, but made gains until the end of the year to finish approximately 3% higher than when Hulbert’s warning was published.
In the video below Hulbert dispells election year myths: