Business Insider this morning ran a small piece discussing Goldman Sachs’ euphoric sentiment indicator.
Goldman chief equity strategist David Kostin writes:
“Our Sentiment Indicator currently stands at a maximum possible reading of 100, suggesting the S&P 500 has near-term downside risk during the next six weeks. The prior week’s reading also equaled 100. An extreme positive reading (above 90) suggests the S&P 500 has a high probability of falling by roughly 3% during the following six weeks.”
This is in agreement with the message coming out of the NAAIM Exposure Index, which was discussed in the post this AM (plus other indicators).
More from Kostin:
“The SI ranges from 0 to 100, with readings below 10 suggesting low positioning, and readings above 90 offering a warning sign that professional investors may be unduly bullish. Extreme positioning is a strong contrarian signal for subsequent equity performance.”
