Sentiment is the dark side of the force when it comes to the markets. We all get price action, momentum and even cycles such as Sell in May. But sentiment? Can be subjective. And freaky. Where else can good be bad and bad be good. Or is dope good and phat good but whack is bad?
When sentiment is really high, everyone likes it so it should do well, right? Nope. Everyone has already bought it so there is nobody left.
My personal sentiment has indeed reached an extreme. I have been looking at this market since Unkle Ben fired up the helicopter and seeing nothing good about it - except that it keeps going up. Nothing matters but the Fed and that was proven May 22 and again last week under hints of tapering. And again when the feral hogs came out to play and the market rallied when some Fed officials said they did not mean it or we just misunderstood.
I am so fed up, no pun intended, with the manipulation of the market and government meddling that I really do want to hang up my slide rule. I joke all the time about chucking it all and opening up a juice bar in Key West. Deep down, I am only half-kidding.
In past PowerPoint presentations I talked about sentiment saying things like, "What happens when entire aisles in the supermarket are dedicated to the Atkins diet and the low-carb lifestyle?" The answer is that it is time to buy bread and cereal stocks.
What happens when the NY Times puts a growling bear on the front page of the news section? Time to buy stocks. And what happens when a major player in commodities trading closes shop? Time to buy commodities.
What happens when my inner bear cannot take it any more? What happens when my inner Libertarian thinks the government is the cause, not solution, to most of our problems?
Time to double down and start marketing my services harder. Talk about cognitive dissonance as right now I want to quit. If someone offered me a job even tangentially related to what I now do I would probably take it.
That means that things are going to change for the better in my world. Maybe it will be a new job. Or maybe everyone else is about to understand that the emperor (economy, President, Fed, political parties) has no clothes and I am about to have my best year ever as a market analyst.
...but it sure would be easier to let someone else worry about the business end of things while I help clients make some money.