In the last four weeks analysts have lowered estimates on 697 companies in the S&P 1500. Bespoke Investment Group's Paul Hickey said that might actually be a good thing for the market.
Hickey told CNBC'S "Fast Money" that sentiment going into an earnings season is usually a contrarian indicator. Since 2009, analyst sentiment heading into earnings season has been inversely correlated to how the market actually performs during the following six weeks of earnings season itself, according to Bespoke Investment Group research.
While analysts lowered estimates for 697 companies, they raised estimates for just 305 in the S&P 1500, the data shows.
A number of factors have contributed to the magnitude of analyst downgrades and revisions in the last month. The weather, low energy prices and currency headwinds from the strong dollar have thrown a wrench in analysts' tabulations. Putting aside the reasoning for analysts' negative sentiment, Hickey suggested that setting the bar low might be exactly what the market needs to perform well.
Hickey broke out the 17 quarters when analyst sentiment was negative since 2009, and found that the S&P 500 actually averaged a gain of 2.40 percent, and traded positively 82 percent of the time, during the six weeks of earnings season. In the seven quarters that analyst sentiment was positive, the S&P 500 averaged a decline of 1.18 percent, with positive returns only 43 percent of the time.