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(Source: Daily Sentiment Index Data, Author’s Chart)
Since the February spike, the silver ETF (SLV) had slid over 18%, and with hopes of the metal hitting $30.00/oz before year-end drowned out by despondence, we’ve seen a massive shift in sentiment. As shown in the chart above, bullish sentiment has slid from a high of 78% in February to a low of 40% in mid-April and is now looking to re-test the 40% level if the lack of enthusiasm for the trade continues. As of last Friday, bullish sentiment remained below 30% on a short-term basis, briefly dipping to 25%, suggesting that there were three bears for every one bull in the trade. For an asset that is up more 34% in the past year and 125% since the March lows, this is a significant level of bearish sentiment. Notably, the 40% level has been an area where sentiment has reversed on three separate occasions in the past two years, with silver finding a bottom shortly after. Therefore, if this pessimism continues, we will see sentiment move to a contrarian buy signal before month-end.
