http://brightassetmgmt.blogspot.com/2010/04/sentiment-going-parabolic.html
Now sentiment has turned 180 degrees. Volatility has increased as fear now dominates where just a few short weeks ago, greed took center stage. See chart below courtesy of sentimentrader.com:
Dumb Money Sentiment has declined to 33% confidence, while Smart Money Sentiment has climbed to 50% confidence; one of the highest readings since March 2009.
As we discussed in the April 16th update, we believed any correction or decline in the markets as a result of extreme sentiment readings would likely translate into an opportunity in undervalued areas of the markets' given the improved economic picture. While we expect volatility could continue in the short-term and markets move lower, the increase in smart money confidence to 50% coupled with a decline in the markets of over 10%, and the fact the dumb money is becoming more fearful, makes us confident that a decent rally could be coming in the weeks/months ahead.
The key is having patience as well as the courage to act against the crowd...
