Last week we said we wanted to see an AAII sentiment reading ~40 in order to lighten up longs and add some shorts: https://www.hedgefundtips.com/aaii-sentiment-indicator-4/#more-703. This morning we got that read (not only with bullish sentiment up around 40, but bearish dropping to the low 20’s – which we haven’t seen in a long time). Now that everyone’s back in the boat, expect some turbulence moving forward. The gains from January now have to be digested.
As with any indicator, it is a barometer, not a crystal ball. Risk management and sizing is key after the statistics favor your positioning.
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