As stocks have descended in the last few weeks, investor sentiment measures have moved into zones indicating excessive fear. As an example, the Citigroup Panic/Euphoria model is in the "panic" territory, which is contrarian bullish.
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Numerous other indicators, such as the Ticker Sense Blogger Survey, to which I contribute and voted "bearish" last week, also confirm the observation that there are too many bears.
Watch what they do, not what they say
What's bothering me is that while all these sentiment surveys point to excessive bearishness, market based indicators such as the VIX Index are not showing very much fear at all.
Remember, what what they do, not what they say. While I have written before that this market is deeply oversold and due for a relief rally, these readings are suggestive that there is more downside before we see an intermediate term bottom.
Disclaimer: Cam Hui is a portfolio manager at Qwest Investment Fund Management Ltd. ("Qwest"). This article is prepared by Mr. Hui as an outside business activity. As such, Qwest does not review or approve materials presented herein. The opinions and any recommendations expressed in this blog are those of the author and do not reflect the opinions or recommendations of Qwest.
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