Price-earnings ratios and dividend yields are showing that the stock market is expensive. And my big-picture economic indicators are signaling high recession risks. My liquidity indicators are confirming this recessionary scenario … they’re telling us that stocks are probably on the verge of plunging into a bear market. Moreover, most stock market sentiment indicators are high enough to allow for major, stock market losses. And one of them, a German sentiment index, grabbed my attention.
The Sentix Sentiment Indicator measures the six-month expectations of European institutional and individual investors. It’s calculated with the following formula:
Number of bulls — Number of bears
Total number of investors
And it’s revealing that …
European Investors Have Turned Very Bullish
As you can see on the chart below the Sentix took a huge jump recently. It actually reached the highest reading since it was invented in 2001, which means according to this indicator European stock investors have never been more bullish. (more)
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