Romanian Sentiment Review – The March Reversal

Last year when we talked about the March reversal, the comments from many on the internet called it a fantasy scenario. This is what we said, “When it comes to BETFI, March has a mathematical symmetry. End of March 2009 may provide a reversal.”
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What happened? Markets moved up from 8000 to 30,000, a rise of 275%. Now that we are once again in March 2010. The month is known for key reversals. We are expecting a turn down now, 50% lower from current levels. This means BETFI 15,000. The sentiment readings are mixed. Individual respondents are extremely bullish, while institutional users are neutral. Historically speaking retail extreme readings can’t  be ignored. Short term readings are also neutral. Individual readings are also key because the number of respondents are more than the institutional users.
The sentiment readings at 68 for BETFI (6 months) is still near historical highs and extremely bullish. A drop of 50% in value is the last thing market participants would be expecting now.  Advance – Decline indicator is also negative and does not suggest a positive tone to us. The indicator continues to diverge from the market prices.  Prices make higher high, while indicator makes lower high.  We continue to expect selling in March 2010. Primary, multi year bottoms are tricky. We have seen a wave of excitement till now, let’s witness some volatility now.

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A Sentiment Index reading can assist to measure these extremities in mood and potential market turns. Survey respondents will not only benefit from the interpretation and indicator readings but also will be invited for regular training seminars on sentiment indicators and provided relevant literature. Orpheus Capitals and Prognosis.ro are two independent research companies publishing the Romanian Sentiment Review. RSR is a sentiment index based on the survey of market players. The respondents are queried on a host of areas including time frame of expectations, bullish and bearish bias and sectoral preferences. The data is then analysed to create various sentiment indices. The readings of the various indices explains the market sentiment and market direction. We also furnish the sentiment data on a periodical basis to financial institutions, fund managers and brokers for further research and investment.
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