Market timers have been notoriously wrong over time and their current positioning could indicate that the recent bull market isn’t over yet, according to Mark Hulbert of Marketwatch. Hulbert’s Nasdaq Newsletter Sentiment Index tracks the positioning of market timers he follows who focus on the NASDAQ. At the end of last week it reached an extreme low level of below -50%, indicating that the market timers he follows are over 50% short the market. Given that this has been a contrary indicator, the negative sentiment actually may bode well for stocks. According to Hulbert “The HNNSI’s current level is the lowest it’s been in five years. If this were a major market top that adhered to the typical sentiment pattern, the HNNSI would have remained at a high level in the face of the market’s recent correction.” Hulbert notes that this index focuses on short-term market timers and as a result, it can fluctuate significantly, but it hits its low last Wednesday and has remained low, indicating that timers have not used this correction as a buying opportunity, and that fact may actually be a positive indicator for the market going forward.
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