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Tuesday, March 03, 2009

Investor Sentiment Has Sy Harding Optimistic

Yesterday Sy Harding, president of Asset Management Research Corp. and editor of Sy Harding’s Street Smart Report, wrote an article at Stockhouse called "Investor sentiment suggests stocks may see better days soon." He says the six straight months of declines is worse than the 1930s! Harding's key reasons to be optimistic for a rally are the major sentiment indicators are near record lows, giving perhaps a "buy when there is blood in the streets" signal.

University of Michigan Consumer Confidence:
The University of Michigan reported this week that its Consumer Confidence Index declined from its extremely low level of 61.2 in January, to 56.0 in February. That’s almost at its record low, which was recorded in 1980, when the economy was struggling to come out of the deplorable 1970’s plunging economy and spiraling inflation (stagflation). The confidence index dates back to 1952, so if it’s almost at its record low, consumer confidence is currently lower than it was in the severe recessions of 1981-82 and 1973-74.
AAII: American Association of Individual Investors:
... the poll of its members by the American Association of Individual Investors is considered to be at extreme pessimism whenever the poll shows bearishness has risen to more than 55%, and bullishness has dropped below 25%. In last week’s poll bearishness had risen to 56.7% bearish, and bullishness had dropped to only 21.7%, and in this week’s poll 55.1% were bearish, only 24.3% bullish.
VIX: CBOE Volatility Index:
"...the VIX Index, also known as the Fear Index, is currently showing a considerably higher level of investor fear than at the bottom of any of the legs down in the 2000-2002 bear market."
The Media:
So far the media is laughing at the new attempts to insert some optimism into the mix.
Harding concludes:
But, these are ‘blood in the streets times’, when historically extremes of pessimism do reverse, at least temporarily. And after a record six straight months down investors deserve a respite.

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