Mukul Pal, on the inflexion point in November

Mukul Pal, Chief Executive at Orpheus Capitals, brought his contribution to sentiment review of experts and investors at the capital market. There are many ways to read market sentiment.

“There are many ways to read market sentiment. We talked about extreme sentiment readings and their interpretation on prior occasions; too bearish or bullish readings tell us what the market is thinking. RSR readings were extremely bullish at the start of the year, when markets were topping and the readings were extreme negative last month in OCT. The month was also an anticipated bottom for us. We mentioned this in July, when we said that a potential low could still be in, it happened.

The November readings are suggesting that the bottom might have already been in place. The inflexion point between bullish and bearish percentage has already lead to a clear overlap. And a majority of readings are reversing their respective trends, Mukul Pal added.

The 1 month readings are more sensitive owing to the smaller time horizon under study. But the overlap between bullish and bearish series and change in trend is visible both in 1 month and 6 month sentiment numbers.

“Though the absolute readings are still negative, the confidence index calculated from the market pessimism and optimism data also show an inflexion. Market overall still expect little from the next two quarters. We interpret this as positive”, he said.

He added that the only caution challenging their otherwise expectations was the number of percentage bulls as a proportion of the market, which was not unequivocal in its readings. RASDAQ readings were also out of synchronization with the rest of the market and don’t look encouraging.

“In conclusion, sentiment inflexion, and price performance over November suggests positivity to us. And the fact that sentiment measures are slow moving indicators, make them slow but less prone to whipsaws,” Pal concluded.

Tracker finds short term optimism for experts and investors

Following the November advances on Bucharest Stock Exchange, participants at the review have improved on short term.

“On one-month term, all Sentiment indicators are at their highest registered values since March, the start of the tracker. Experts are jumping fast from an extreme to the other, wiping out the frenzy and panic they have been through at the end of October, and becoming suddenly optimistic”, reads the market sentiment reading report, framed by at the end of November.