European equities are likely to post an average fall of 7 percent over the next six months, the BNP Paribas Love-Panic sentiment indicator shows, with one indicator signalling a 'strong buy' and three a 'strong sell' for an overall 'neutral' rating.
The weekly composite contrarian sentiment indicator aggregates moves in a range of other positive and negative indicators to help investors time equity exposure and decide on tactical asset allocation. When indicators suggest more distress in the market, it can be time to buy, and vice versa, they write.
The strongest signal of positive sentiment over the last week came from the economic surprise indicator, while the strongest negative signal came from the the earnings revision index, the report says.
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