Market comment 2020

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One indicator that helps fill this explanatory void is market sentiment. Only this week did bullishness among short-term market timers start to reach a dangerous extreme; contrarians therefore were not particularly surprised by Thursday’s decline. As recently as a week ago, short-term stock market timers were “surprisingly subdued.” Because of that, contrarians were predicting that “the Nasdaq is likely to hit an all-time high.” The Nasdaq Composite COMP, -5.26% did indeed reach a new high earlier this week, closing above the 10,000 level on Wednesday — only to lose 5.3% a day later. Unfortunately for stock investors’ near-term prospects, market-timer sentiment won’t shift back to supporting higher prices until there’s a lot more skepticism. Thursday’s plunge started that process, but there’s a long way to go.

 The real reason for the stock market’s 7% plunge shouldn’t surprise you — and it happens every time - MarketWatch

And here is that indicator: