ETF Investing: When Bearish Can Be Bullish

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Seeking Alpha had a short blurb on the interpretation of investor sentiment. The story cites a recent sentiment survey showing that the sharp drop on the 20th anniversary of the ’87 crash caused bearish sentiment to rise to its highest levels since May of this year.

Their 5-year chart supports the view that, after extreme high sentiment readings that, more often than not, the markets performed well—at least for some amount of time.

It’s a contrarian indicator that is interesting to note, but I would not hold my breath but rather rely on my sell stop discipline to get me out of the market should it turn out that the bears are right this time.

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