Elliott Wave Options: 68% Of Investors Expect More Downside!
Short-term market moves often come down to expectations. If traders expect good news, stocks may rise in anticipation. However, if there’s a negative development, stocks may sink before the full impact – if any – becomes known.
Understanding investor sentiment can help out in a number of ways. It can give an idea of the direction for short-term trades. And it can be a sign for long-term investors to wait for a better price, or enter a trend now.
While markets have held up well in recent weeks, 68 percent, or over two-thirds of investors, expect the stock market to decline from here.
That’s a negative sentiment. And it’s supported by the fact that the recent market move higher has occurred on low volume. That suggests that big investors aren’t moving money into stocks right now.
Overall, that’s a sign of caution. If volume were increasing on the way up, it would be a strong sign of institutional buying. And likely a sign that higher cash and fixed income money was flowing into stocks.
Other data from the past week, such as slightly rising jobless claims, suggests a slowing economy. As does the slowdown in producer inflation, which didn’t slow as much as expected.
With slowing data and without strong volume supporting the current rally, the majority fears of a market decline ahead may prove a self-fulfilling prophecy.