Bearish sentiment in the US stock market continues to grow, reaching new heights and causing concern among investors.
Rise of Bearish Sentiment Among Investors
Bearish sentiment in the US stock market has significantly increased, surpassing 50% for over five consecutive weeks according to the latest American Association of Individual Investors survey in late March. This marks the second-longest bearish streak since the survey's inception in 1987.
Experts' Reactions and Changes in Hedge Funds' Strategy
The rising bearish sentiment correlates with Goldman Sachs data showing hedge funds' net selling of US stocks reaching a seven-week high. Short selling has notably exceeded buying, indicating a shift in strategy among institutional investors. Experts like Will Low of Nikko Asset Management note potential stabilization as major corrections unfold.
Historical Trends and Their Market Impact
Did you know? During past economic downturns, investor sentiment matched current levels, particularly during the 2007-09 financial crisis and the 1990 recession. High levels of bearish sentiment have coincided with significant economic challenges, prompting professional investors to adjust their strategies. Paul Hickey emphasized that while short-term market volatility remains, historical trends suggest such pronounced pessimism can lead to long-term stabilization.
The increased bearish sentiment in the US stock market can be an indicator of future market shifts. Experts recommend monitoring economic data and sentiment indices to predict new market directions.
