By Steve Blumenthal, CIO
CMG Capital Management Group
Trade Signals, Wednesday Nov. 26, 2014 — Trend evidence remains positive as measured by Big Mo and the 13/34-Week EMA on the S&P 500. Sentiment is far too bullish, suggesting short-term caution.
Sentiment has reached the extreme bullish state about 28.5% of the time since 1994. The average return is a -10% when such extremes have been reached. The simple message is to be weary of crowds at extremes.
Investment Risk Elevates: Due to current extreme bullish sentiment, I’ve moved the risk arrow farther to the right.
Conclusion: Trend evidence remains positive and don’t fight the Fed or the tape remain the important theme. Own equities (but hedged).