Consider the average recommended equity exposure among those short-term market timers monitored by the Hulbert Financial Digest who focus on the Nasdaq market (as measured by the Hulbert Nasdaq Newsletter Sentiment Index, or HNNSI). This average currently stands at minus 43.8%, which means that the typical Nasdaq market timer is currently recommending that his clients allocate nearly half of their equity portfolios to going short.
That would be noteworthy at any time, since rarely has the HNNSI been this low. But it’s especially so right now, since the stock market is coming off such a strong rally. After all, from its intraday low a week ago, the S&P 500 index is now 11% higher.
Hard To Believe: Part Two
Here is more evidence that the crowd remains extremely bearish even after this enormous rally. From Marketwatch: