We appear to be witnessing that now. Lingering doubts are slowly entering the system, but the prevailing mood is still of a positive nature. Hope still rings eternal among investors, but the decibel level is a little lower. The bond market is a different story. It is fear, not hope, that reigns here.
Traders now see the glass as half empty.
We mentioned in that same March column that sentiment that builds over a short time frame changes trend rapidly. We are seeing the beginning of this sentiment trend change in Internet stocks, and we are seeing the full effects of this rapid mood swing in the bond market where sentiment has turned fully bearish. The implications of the rapid trend change in bond market sentiment are anything but a positive for the stock market. When trader's enter a bearish mindset their perspective does a reversal and they see the negative while overlooking, or downplaying, the positive. Such was the case on Friday.