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Weekly Sentiment Poll - 5 Jan 2017

This week we ran the sentiment poll for 2 days as the polling day fell on New Year's eve/day. But we still got a similar number of respondents, and some interesting standouts in the results. As a reminder, the Weekly Equity Sentiment poll uses Twitter polling and distinguishes between whether respondents are bullish or bearish primarily on the back of fundamental vs technical analysis reasons.

The first chart shows the trends in the responses for each of the options, notably the latest results show bullish technical sentiment trading places with bearish technical sentiment, while fundamentals are doing the opposite.

Next is a look against the S&P500, which shows the overall bull/bear spread falling back from quite optimistic levels seen around the recent highs (a contrarian bullish signal?).

Interestingly the "fundamentals" bulls vs bears spread seems to have served as a leading indicator, e.g. falling prior to the low in November, and surging thereafter along with the Trump rally.

And finally, if you invert the overall bulls vs bears sentiment spread you get a pretty good fit with the VIX or CBOE volatility index. It seems as though the indicator has worked as a leading indicator at times, which is interesting given the latest observation - is a VIX spike on the cards?

Overall the pull-back in sentiment is probably a healthy one, and if the fundamentals bull-bear spread is anything to go by we could see higher prices from here. The complicating factor is that last chart which shows the potential for a VIX spike...

What are your thoughts? Feel free to add your comments below.

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