Recent market sentiment retrospective as we enter 2022

Excerpted from NFTRH 687, an intro to the Market Sentiment segment…

We started using the chart below in order to maintain perspective back in 2020 as we managed the recovery out of the COVID crash.

The rebound was in the bag from the moment the Fed began manufacturing the inflation. VIX topped out and SPX bottomed out in a blaze of glory that was a sentiment blow out, pure and simple. As we noted at the time, the terror was simply unsustainable.

How far we have come. What was once a compelling contrarian opportunity now drags on and on as a played out hindsight. All through the process the usual bear suspects were calling the usual bear calls, which the robo-market has resisted, and used as fuel.

This is a sentiment segment and in it I’ll give you a little bit of my personal sentiment. My sentiment is that I think I feel people wanting to be bearish, afraid of the stock market because [insert expert opinion here] said so. I feel people worn out, tired of the grind.

Personally, Q1 and Q2 2020 were way more enjoyable than today, late in the upward grind. Each week I go on about how trends are intact and so the markets are bullish while realizing sentiment is structurally over bullish and risks abound.

Yet at the same time I present trade/investment ideas as I have done since the depths of the 2020 crash. What’s more, I’ll continue doing so in spite of the obviously and generally poor risk vs. reward ratio on the broad market. I’ll continue doing so with appropriate advice about risk management until such time as trends break and indicators sound alarms.

Media interference like we got in spades in November, is not a reason to go bearish. It was simply another interim sentiment twitch the likes of which have refreshed the bull since the ‘robo’ part of the rally began in mid-2020.

spx and vix

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