Nasdaq Sentiment Remains Near its Highest Levels Since March 2000

You might have thought that Monday’s slide in the equity market wiped out quite a bit of the euphoria in the markets. ┬áIf so, you’d be wrong based on the Hulbert Nasdaq Sentiment Index which is still at its highest level since March 2000:

Via Short Side of Long:

What I find even more intriguing than all the technical mumbo jumbo I just wrote about, is that just about everyone is not expecting the outcome laid out in this post. Mark Hulbert runs a great service called Financial Digest, which tracks the opinions and recommendations of various newsletter advisors for the Nasdaq. Just like any other contrarian indicator, when the Hulbert Nasdaq Sentiment shows the majority of “gurus” holding net short exposure it usually means its the time to buy and visa versa. Chart 3 shows that the current readings were above 90% net long exposure, which is one of the most bullish readings since March 2000 (the month the Tech Stock bubble burst). With just about everyone positioning themselves for higher prices, what could possibly go wrong? It is truly rare to find anyone out there expecting a bear market, that is for sure.


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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  1. Ha! 0.1% Q4 GDP print this morning! Hulburt’s NASDAQ Index is about to make a new high! Pile on, Mom and Pop Investor, get your cash in now! Because the only direction is up, up, up, right? Right?

    I can honestly say the last time I felt this wary of the market was in October 2007… The wave is coming in again to wipe everyone out. Weak DIA earnings… Wal-Mart internal discussion of poor retail numbers… Italian election rejecting austerity… Spain youth unemployment… Germany being pulled into the euro abyss… US debt ceiling Sword of Damocles Part 2… possible downgrade of US AAA rating (again).

    Removing the $85B a month by the Fed and its resultant effects, can anyone please explain where the light at the end of the tunnel is? Anyone?

  2. Ok DC, here you go! The market is a forward looking device and this is what it is looking at. Bots are making companies hugely profitable and earnings are great. MIT’s energy initiative says that in less than five years solar power will be able to store electricity without batteries and it will be cheaper to install than the replacemt charge for your existing furnace. Just plug your car in at night and forget about it. While I’m on energy lets not forget fracking, petroleum for at least another 100 years at present user rates. Here’s hoping the arabs have kept their camels well fed for the last few decades, they will be back to riding them before they know it.

    Housing is starting to cook again, people are out and about spending in restuarants and shops and their attitude about their situation is showing a subtle shift towards being more positive. Attitude is everything!!

    Bernanke is going to keep the pedal to the metal for as long as it takes and by the time he starts to withdraw stimulis no one will care because of the way things are rolling by then.

    By nature I’m a pretty pessimistic guy, but I can’t help but feel, like so many other people I know that we are turning the corner.

    Hope this helps–

  3. And don’t forget the imminent plunge in gold or the crappy returns on bonds. Still, the reference to 2000 and the seemingly baseless (don’t really claim to know, just sayin’) run-up in stocks is nostolgic. “Irrational exuberance” ring a bell? That was a lot of fun, as hard headed bull markets are. Enjoy the ride, but don’t fall asleep.

  4. Well, I would say the numbers coming in today both here and abroad show we are in some trouble. Good luck with that optimism — it may be all you have soon.

  5. DC- I’m not saying you’re wrong on your macro call, just early in your market call. And the possibility exists that we’re both wrong. But so far the market trend is intact.