The current sentiment of the media seems to be nothing but doom and gloom. Many of them are worrying about a double dip recession. They feel that we are just beginning to come out of the recession and are still on the precipice. They feel that any slight push or draft will force us back over the edge, into the deep dark hole of another recession. The stock market and its managers seem to be feeding off of this sentiment.

A true contrarian loves this time of negative sentiment. They are actually optimists at heart who see buying opportunities around every negative corner. Jeff Sommer is the author of The Art of Contrarian Trading. This is a blog devoted to contrarian thinking. In his latest article dated July 6, 2010 he discusses the buying opportunity provided by the current media attack.

Mr. Sommers indicates that one article in The Economist shows a shark cutting through the water on its cover page. The caption talks about the hidden danger in today’s market. Mr. Sommer says that the stock markets 15 percent drop in May, 2010 reinforces the reluctance of the average investor to ‘get back into the water’. He goes on to say that this reluctance is a truly great buying chance for the contrarian investor. If they are not already fully invested in the stock market, and making money, they should certainly do so now. His feeling is that the stock market is merely positioning itself for a sustained climb upward.

There are many articles which support this theory by Mr. Sommers. The author of an article on the Equity Clock states that the markets have been oversold and he feels that they are due for a bounce. He does feel however, that this bounce may be short term leading up to the earnings release period.

This attitude can probably be traced to last quarter’s positive earnings release. If the reporting companies can continue to sustain the growth begun in previous quarters, then I feel you will see the private sentiment to begin to improve. Then the market will continue its upward climb to very profitable heights.

Mr. Sommers also indicated that the option trading is pointing to a bullish sentiment. Initial suggestions indicate a buying signal. His advice is to remain defensive in high quality dividend paying stocks.

So I would suggest that your ought to consider yourself as a contrarian. The best time to buy is when everyone else is selling. This is indicated in Its A Wonderful Life when Mr. Potter tries to buy up the town during the great depression. He certainly saw a buying opportunity when it presented itself.

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