PHASE 4 INVESTORS ARE EMERGING FROM THEIR MAN CAVES
A good time to check in on what Phase 4 investors are up to. It has been a little more than a month since we last checked on this reliable group of investors. Unbeknownst to themselves, they have become one of the best market timing indicators out there from a contrarian perspective.
On June 20th, I noticed that Phase 4 investors were selling at a furious pace, indicating an extraordinary amount of fear. That marked the exact bottom of the correction. The article from June 20th is here.
They only recently (by recently I mean the past few days) have been stepping up and buying stocks. This is despite the fact that the Nasdaq 100 is at a decade plus high as of Friday's close. The ferocity with which the markets have gone up caught a lot of people off guard, Phase 4 investors included. They have been hesitating to buy. I think they are just beginning to feel comfortable.
The lack of interest in these stocks is a good thing for anyone who is bullish on the markets. There are other Phase 4 names that I track also. While they haven't experienced the level of lackluster price action that FNSR, JDSU and CIEN have, there has also been some hesitancy amongst the most speculative groups of investors to do business again. They are fearful of the markets, which is exactly what you want them to be if you like your rallies to be fruitful in nature.
I will be updating when and if anything changes with our Phase 4 buddies. If you are not familiar with Phase 4 investor theory, please read about it here.
Here are the charts of FNSR, CIEN and JDSU with thoughts:
FNSR
CIEN
JDSU
