Is a bear market really coming! Contrarian indicators disagree.

"...back to 1980s, whenever bearish newsletter advisors outnumbered bullish ones for the first time in a year, three month stock returns were positive 100% of the time."

Everything I have been reading lately on the stock markets is bearish. Rarely are the talking heads all right on their calls. 

This from Short Side of Long: 

Lowest percentage of bullish newsletter editors since Lehman bankruptcy

 

Source: Short Side of Long

We discussed sentiment at the beginning of this month, focusing on Investor Intelligence newsletter and advisor survey. At the time, we concluded that bullish sentiment has dropped to levels we have not seen since March 2009 lows. A quick update this week shows that bullish advisors have fallen even further. Apart from the Lehman bankruptcy and the aftermath market crash of October 2008, there has been no other time bullish sentiment was this low in the last two decades.

Asian Financial Crisis in 1997, Russian default in 1998, Tech crash in early 2000s, September '11 attacks, World dot com bankruptcy and all other panics have not scared the bulls as much as the first potential Federal Reserve interest rate hike since 2006. It is very clear that market participants have gotten use to extremely loose monetary policies via all major central banks.

Furthermore, for the first time since the Eurozone entered a recession in 2011, bearish newsletter advisors have now outnumbered the bullish ones. According to SentimenTrader research with he data going back to 1980s, whenever bearish newsletter advisors outnumbered bullish ones for the first time in a year, three month stock returns were positive 100% of the time. The average return was about 8% gain in the coming 12 week timeframe.

First time since 2011 EU recession, there are more bearish than bullish advisors 

Source: Short Side of Long