Was the market ready for a fall? You bet. The Sentiment Signals© reported the predominant negative/uncertain mood in April, May, June and July. And after the past 2 weeks of market volatility, the sentiment in the news is now genuinely worried.
Overall market sentiment has shifted even more into the negative/uncertain range over the past month. The previously dismissed sub-prime lending situation has roiled credit markets and although the potential ripple effect is recognized, its magnitude is still unclear. Many in the financial community are calling for action by the Fed to save stock prices and minimize the potential for more home lending defaults.
For several months now many observers have been confounded by strong market performance in the face of a rising tide of bad news. Many of these fears now appear justified, but still unresolved. Will the sub-prime lending problem become even worse? Will it spread? Will the looming credit crunch constrain corporate and consumer spending? No one knows. Our experience suggests that any rebound will arise tentatively. One of the most revealing measures this month for overall Economic/Investment Sentiment is that for the first time in 5 months, there is now a very small contingent in the Business news, just 2%, that are “very negative.”
The Sentiment Signals Scorecard for August 3, 2007:
* Guru media: Positive Sentiment: down to 16% vs. 19% in July, and 28% in June.
* Business media: Positive: down to 26% vs. 31% in July, and 37% in June.
* Mass media: Positive: down to 14% vs. 18% in July, and 22% in June.
To access the full Sentiment Signal Report, visit www.trendpointers.com.
TrendPointers publishes a report of emerging trend indicators for investment conditions and specific business sectors each month at www.trendpointers.com. TrendPointers, LLC is a business trend and research firm that investigates how the continuous flow of news and public information influences business decisions and impacts the financial markets. TrendPointers subscriptions are available at www.trendpointers.com.