It's hard to find pessimism, except in this one market

In a market that's sloshing with money and financial assets are soaring, it's hard to find anything that's hated.

Looking at our Market Sentiment Overview, the Japanese yen is currently the only major market with a low Optimism Index, and even that isn't too terribly extreme.

Market sentiment

This is interesting because right now is the start to the best seasonal window in the yen. There are times when trends tend to have a certain bias, and for the yen, that bias has been positive from early April through mid-October.

Japanese yen seasonality

Over the past 50 years in the JPYUSD cross, buying day #67 (early April) and selling day #26 (mid-October) has been a decent trade. The win rate was 62%, and the average win was quite a bit higher than the average loss.

Stat Box

The latest survey of individual investors from AAII showed 56.9% of respondents expect stocks to rise, the 3rd-highest reading of the past decade. The other two, in November 2014 and January 2018, saw stocks rise temporarily then give back those gains.

What else we're looking at

  • More detail on yen (and gold) seasonality for the coming months
  • Sentiment on the yen is the 2nd-most depressed in 5 years
  • Extremes in yen sentiment have tended to coincide with extremes in gold
  • There is another sector with a strong seasonal bias right now
  • Taking a look at a risk-on / risk-off model using 52-week lows

The post titled It's hard to find pessimism, except in this one market was originally published as on on 2021-04-08.

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