Sentiment is So Bearish, It's Bullish

(5/10/22) Markets have been deeply over-sold, with sentiment so bearish, it's bullish. Be careful not to throw in the towel, just yet. Markets did sell-off all day Monday, resulting in one of the top-five leading sell-off days in history for retail investors. At three standard deviations below the mean, the S&P is trading 11% below the 200-DMA. But just last year, we were talking about the S&P trading 12% above the mean, setting up for a predicted correction. Previous periods of over-sold conditions into three standard deviation territory, the result has been a reflexive rally. We believe markets are set up similarly now. All that's needed is a catalyst to create a bullish bias, like softer reading on inflation giving market hope the Fed won't be quite as hawkish on interest rates. However, there is a risk that things could go south from here. The odds of a reflexive rally are fair--use that opportunity to sell into the rally, and avoid selling at market lows. Most of all, be patient for the right opportunity to put money back to work.

Hosted by RIA Advisors' Chief Investment Strategist, Lance Roberts, CIO
Produced by Brent Clanton
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