In his MarketWatch column, Mark Hulbert discusses the relationship of market timers and contrarians when it comes to sentiment and market performance. Noting that it is possible “short-term market timers will be right,” Hulbert observes that “more often than not in the past, the market timing community has gotten it wrong – especially when they’ve coalesced around an extreme position.” And right now, his Hulbert Nasdaq Newsletter Sentiment Index (HNNSI), which is Hulbert’s most sensitive sentiment index, has plummeted since January as the chart below indicates. Essentially, this means that the market timers have turned sharply bearish as the actual market conditions have improved significantly. Revealing his affinity with the contrarian camp, Hulbert says: “On Jan. 22, for example, even though the stock market had already fallen 10%, I reported that there were still a surprising number of bullish market timers – and concluded that the market therefore had yet to reach bottom.” Now, “the HNNSI currently stands at minus 25%, which means that the average Nasdaq market timer is allocating a quarter of his equity portfolio to an aggressive bet that the market will decline,” and this is “some 50 percentage points lower than where the HNNSI stood during the first week of January – the last time that the stock market was trading at close to current levels.” So, Hulbert says, “contrarians are therefore expecting higher prices in coming sessions.” However, they “are refraining from forecasting how long they think the rally will last or how high the market will go.” Going forward, though, Hulbert concludes: “if the market timers remain as stubbornly bearish as they have been in recent sessions, especially in the wake of further market strength, then contrarians will be betting that the rally has yet more to go.”