Investment “contrarians” are those who look for extremes in sentiment as signals that it is time to “go the other way”. Analysts at Bank of America Merrill Lynch (BAML) said in a research note that a contrarian “buy signal” had been triggered following the market sell-off in the month of August. In its note, BAML said its “Bull & Bear” sentiment indicator had tumbled from 2.4 to 1.3, triggering the signal - the first one since January of this year. A reading below 2 on its “Bull & Bear” sentiment indicator is classed as extremely bearish and causes a buy signal to flash. The bank said this week’s drop into buy territory had been due to outflows in emerging market debt and equities, as well as a rapid rally in Treasury markets. (Chart from CNBC, using data from BAML)
BAML- Bull and Bear indicator
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September 03, 2019