Contrarian investors often use sentiment polls to go against the crowd. [Navigating Volatile Markets with ETFs]
“Sentiment is not so easy to interpret,” said Robert Colby at TraderPlanet on Thursday. “Contrary to what many contrarians seem to believe, when advisors turn this cautious, stocks sometimes have much further to fall. Examples include similar levels of bearish sentiment in April 1973 and in July 2008, after which stock prices fell much further.”
SPDR S&P 500 ETF (NYSEArca: SPY)
Full disclosure: Tom Lydon’s clients own SPY.