We’ve been doing some additional work around the risk on and risk off buy and sell indicators that Big Mo generates. I share some of that data below (under the Big Mo chart). Take a look.

Included in this week’s update (the usual weekly charts):

  • Sentiment Charts – Crowd Sentiment is Extremely Optimistic: Hedge
  • Sentiment Indicator Based on Forecasts Gathered From 130 Stock Market Newsletters
  • Cyclical Equity Market Trend Charts – Both Trend Charts Remain Bullish
  • Big Mo – Sell Signal to Buy Signal Data (average decline -11.20%)
  • S&P 500 Index Median PE Overvalued and Undervalued Price Targets (as of February 28, 2014)
  • Provided are several links to learn more about the use of options to hedge

Investment Sentiment charts 3-11-2014:

Sentiment Chart 1 – NDR Crowd Sentiment PollExtreme Optimism:

3.12 chart 1

We have quickly moved back to Extreme Optimism (Bearish) in this chart. Investor sentiment most recently peaked at 73.9. This is the second highest reading ever recorded – data 1995 to present. I continue to favor hedging long-term equity exposure until extreme pessimism is reached.

If you are a new reader, the gray area highlights the historical market performance when Investor Sentiment, as measured by Ned Davis Research, moves into the Extreme Optimism (Bearish) Zone (above the dotted black line or a reading of 66).

Read the rest of the report…


Steve Blumenthal

Founder & CEO CMG


Stephen Blumenthal founded CMG in 1992. He is CEO, Chief Investment Officer and portfolio manager at Capital Management Group, Inc. where he manages equity and tactical investment portfolios. He is a frequent speaker and writer on investment strategies and has been featured in various media sources including the Wall Street Journal, Barron’s, Investor’s Business Daily, Pensions & Investments Magazine, Investment News, RIA Biz and Smart Money. He has been a guest on CNBC, Wall Street Journal Live, and Bloomberg. Mr. Blumenthal is a frequent speaker at industry conferences (NAPFA, IMCA, Index Universe, Opal Financial Group Indexing & ETF Summit and NAAIM) and is author of CMG’s popular investment research commentary. With 30 years of investment management and industry experience, prior to founding CMG, Mr. Blumenthal worked for Merrill Lynch Institutional, Merrill Lynch Retail and Prudential Securities.

Mr. Blumenthal graduated with a Bachelor of Science degree in Accounting from Pennsylvania State University. He is married, has three children and is active in his community coaching youth soccer.