On Wednesday night (8/21/13), I sat down at my desk to start my evening stock screening. An UNUSUAL sequence of bearish events occurred:
1) I went to check email and I received 2 separate notes from clients. The first one said: Thank you for protecting my IRA during this correction so far, please continue to stay defensive as a crash is coming soon. The second email said: I subscribe to a newsletter service that is calling for a market crash. Please be advised and take the appropriate measures.
2) I went to look up the NAAIM number, which is posted every Wednesday (here’s the link). It SHOCKINGLY dropped to 34.76! Rather than explain this sentiment survey, you can just read about it on their website.
3) I logged into Twitter and my ENTIRE stream was EXTREMELY negative. I’m not talking about the usual bears, I’m talking about the people who are normally bullish. We’re a few percent off the highs and they seemed “end of the world” bearish.
4) I called a hedge fund colleague of mine and he said he JUST got off the phone with a client who is warning him about an imminent crash.
I immediately looked out my window because I was expecting a camera crew from the show Punked to be outside. It’s too bad all this happened after the after-hours trading session because I was seriously considering LOADING UP my equity exposure (side note, I don’t trade futures).
Although I’ve seen this phenomenon of extreme fear before, this series of events seemed very strange to me. Does it mean anything? I’ll leave that up to you to decide. Have we bottomed yet? Not sure, but I will say that I’ve turned a little more bullish going into year-end. Good luck trading!
I can be reached at: email@example.com.