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Thursday, December 8, 2016
"The spread between optimism and pessimistic indicators is getting stretched," my friend Jason Goepfert wrote this week. "Like really, really stretched."
Jason is a level-headed guy... He doesn't get overly emotional about the markets like this often. Instead, he sizes up investors' emotions for a living.
Jason is the founder of SentimenTrader.com. We've known each other for many years. He does some of the most important research on Wall Street, in my opinion.
While Jason doesn't often get worked up about the markets, it's clear that right now he's concerned about weakness in the stock market in the short term...
"Nearly 45% of our core indicators are showing extreme optimism," he wrote this week, "while 0% are showing pessimism."
Note he didn't say that 45% of his indicators are showing some optimism... He said 45% are showing extreme optimism.
So what does this mean for us as investors?
Jason thinks stocks will underperform in the near term. Specifically, he puts the likelihood of a positive return over the next two weeks at just 40%. And stocks could underperform for as long as a few months.
Here's exactly what he wrote (backed up by his charts and research):
So if Jason doesn't like stocks right now, is there anything he DOES like?
He actually likes some major asset classes over the next few weeks – ones that many DailyWealth readers have been chomping at the bit to buy but have been too afraid to pull the trigger on right now.
"[Asset A] risk is back down to a very low level, which has recently led to short-term rallies," he wrote in that same recent commentary, and "[Asset B] risk has declined to a similarly low level."
To be fair to Jason's paid subscribers, I can't share with you what Assets A and B are. But if you are interested in investor sentiment, I urge you to check out Jason's work.
Jason is the best in the business at analyzing investor sentiment. And right now, he's concerned.
I typically don't trade in short-term time frames like days or weeks. I don't believe I have any trading advantage in that time frame. But I do trust Jason's work.
If you have a position where you are expecting a big move higher over the next two weeks, I urge you to check out his recent research.
Personally, I still believe we have significant upside ahead. But if Jason is right, the next couple weeks could certainly be tough before a rally resumes...
Steve has been closely monitoring sentiment in gold for the last few months. In October, he noted that investors still loved gold stocks. And earlier this month, he explained why bullish bets on gold are going down... but that it still isn't time to buy just yet.
Longtime readers know the three things Steve looks for in an ideal investment. Learn what sentiment has to do with one of Hollywood's most famous families right here: The Only Thing That's Worse Than Being Hated.
THE BULL MARKET IN ENTERTAINMENT
Today's chart showcases a growing entertainment and dining business...
National arcade chain Dave and Buster's Entertainment (PLAY) is an adult version of Chuck E. Cheese's. Its 91 locations in 33 U.S. states and Canada offer a full-service restaurant, arcade games, and big-screen TVs for sporting events.
The $2.4 billion company recently announced plans to build another 11 locations. Earlier this week, Dave and Buster's reported blowout earnings, noting that it expects sales to hit $1 billion for the first time ever. The company's executives also highlighted successful summertime promotions as a boost to the company's revenues.
Investors reacted well to the news, pushing shares to a new all-time high. The stock is up more than 35% this year alone. The takeaway is clear: Even adults like to enjoy the neighborhood arcade...