Taps Coogan – April 2nd, 2023

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The following chart, from Bank of America via Isabelnet, highlights just how bearish fund mangers remain.

As we noted about a month ago, the relative strength in the market this year appears to be driven by retail buying, not professional fund mangers who remain near record levels of bearishness.

Bearish sentiment has tended to be an imperfect contrarian indicator. The low during the Global Financial Crisis came five months before the S&P bottom in March 2009, during which time it fell another ~30%. The lows for this cycle were also about five months ago (October 2022), though we have not had a proper recession yet. Perhaps the bear market has entered a more substantial pause before a recession later this year or next?