More Novacaine Please!

On Monday afternoon around 2PM I was sitting in the dentist chair having a cracked tooth capped. Luckily I have good teeth but that means that I have had very little experience with being shot up by Novocaine. As the dentist was firing up the drill, I was a little concerned that my tooth wasn’t numb enough and to make matters worse I was watching CNBC with a gaping wide mouth as the stock market was just starting to dive.

Fortunately, three good things happened. One, my tooth was numb enough and my cap went on fine. Two, I missed the dramatic 1600 point drop in the Dow while I was paying my bill and three, I have been waiting on a pullback in equity markets as sentiment levels were skewed negative (see my BOXCAR Teddy post).
Now that we have had an approximate 10% decline from the S&P 500 high on 1/26/2018, how do the sentiment readings look this week? The good news is that sentiment levels have improved dramatically and the “wall of worry” is starting to be rebuilt. The bad news is that sentiment levels are not to the levels where other equity bottoms have taken place. For example, look at the percentage of bulls from the last couple of major market corrections compared to today.
As we all know, the equity market doesn’t ring a bell at the top or the bottom. However, we expect sentiment levels to continue to improve over the next couple of weeks as the experts on CNBC explain the reason for the collapse. In the meantime, we are going to use this correction¬† to slowly put money to work in those companies we feel are the most attractive.
As always, American Capital Advisory is still accepting investors into our investment strategies and I would welcome any referrals.