MARKET ANALYTICS TEAM, MARCH 24, 2017
Invest Up Sentiment Indicator for US Treasury Bonds - FEAR
The Invest Up Sentiment Indicator for US Treasury Bonds rose 1.64 points in this month to 8.64, following a decrease of 3.17 points in the previous month, and a drop of 12.45 points in January.
Rated FEAR, the current reading of 8.64 indicates excessive pessimism and an oversold condition in the bond market.
The indicator is designed to enable investors and advisors to detect irrational greed and fear in the bond market. Our research shows that one of the best ways to forecast whether US treasury bonds will go up or down is to assess whether investors are excessively bullish or bearish. Extreme bullishness and extreme bearishness often lead to key turning points in bond prices.
The indicator moves between 0 and 100. A figure below 30 is rated FEAR and associated with excesses in bearish sentiment resulting from investors' fear of uncertainty. On the other hand, a value greater than 70 is rated GREED and associated with excessive bullishness and greed in the bond market. Historically, the GREED and FEAR ratings have had strong correlations with turning points in the bond market. A rating of GREED, indicating excesses in bullish sentiment on the part of most bond investors, often leads to a topping in the market and a downside correction. Similarly, a rating of FEAR, indicating high pessimism on the part of most investors, often leads to a bottoming in the bond market and an upside reversal.
Using the indicator as a guide, investors will be able to dynamically adjust exposures in US treasury bonds, tactically avoid long positions when the market appears overbought, and enter the market when the indicator signals an attractive buying opportunity.