LIVE MARKETS-Fear gauges are flashing extremes and history says that's bullish - Carson Group
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
FEAR GAUGES ARE FLASHING EXTREMES AND HISTORY SAYS THAT'S BULLISH - CARSON GROUP
Amid the U.S.-Israeli war on Iran, market sentiment has taken a hit.
With this, Ryan Detrick, chief market strategist at Carson Group, says that he's seeing levels of fear and pessimism consistent with past major stock market lows.
"The obvious driver would be some type of better news or resolution with the war in Iran, but with so many investors and hedge funds positioned for more pain, the true pain trade would be to see higher stock prices," writes Detrick in a note out on Wednesday.
Detrick cites 11 reasons he thinks sentiment says to stay bullish.
His reasons include the CNN Fear & Greed Index, which is firmly in the "Extreme Fear" camp.
He also cites a recent issue of the Economist magazine, whose cover includes an explosion and a red arrow pointing sharply lower.
Another sign Detrick points to is last week's American Association of Individual Investors sentiment survey, where bears spiked to their highest level since mid-November.
Detrick says that the National Association of Active Investment Managers (NAAIM) Exposure Index has hit its lowest level since April 2025.
According to Detrick, last week saw the largest one-week fall in Asset Managers’ net positioning (by dollar value) since the 2020 Covid crash. Additionally, the Bank of America Global Fund Manager Survey saw a six-month low in investor sentiment.
In another sign that investors are bailing on equities, Detrick says that last week saw outflows from equity ETFs, something that rarely happens and that hasn’t been seen since April of last year.
Detrick notes that Goldman Sachs data showed a "historic jump in ETF and index shorting last week, in line with some of the largest jumps ever." He adds that last Thursday saw continued private credit concerns and the potential fallout. As a result, he says Bank of America data showed record outflows from financial funds.
Call-Put skew is another factor. Detrick says it's "showing off the charts demand for put protection relative to calls. When everyone wants insurance and will pay nearly anything for it, it means a lot of bad news is likely priced in and as you can see below, previous negative spikes like this have occurred near market lows."
Finally, he says "ETF volume of short ETFs has hit the highest level EVER."
Detrick's bottom line is "worries have spiked recently, but I’ve done this long enough to know that when we see various clues that sentiment is getting extended, fading the consensus is the way to go."
(Terence Gabriel)
EARLIER ON LIVE MARKETS:
FED RATE CUT AND HIKE ARE EQUALLY UNLIKELY - BNP CLICK HERE
WINTER'S BONE: LOWEST JOBLESS CLAIMS THIS YEAR, WEAKEST NEW HOME SALES SINCE 2022, (AND MORE) CLICK HERE
STOCKS DROP AS OIL GAINS, IRAN WAR INTENSIFIES CLICK HERE
POST-FED ROUT SENDS DOW BELOW KEY LONG-TERM MOVING AVERAGE; 45,000 SUPPORT ZONE EYED CLICK HERE
SOCIETE GENERALE'S CURRENCY RECOMMENDATION STRAITJACKET CLICK HERE
CITI: ENERGY STOCKS AREN’T JUST ABOUT THE OIL PRICE CLICK HERE
90% OF THE STOXX IN THE RED CLICK HERE
BEFORE THE BELL: EUROPEAN FUTURES TUMBLE AS ECB, BOE LOOM CLICK HERE
CENTRAL BANKERS SOUND INFLATION ALARM CLICK HERE
