SENTIMENT INDICATORS:

Listed below are the Contrary Opinion statistics that I use on a weekly basis ( any more frequent would be redundant). As any analysis is more an art than a science, each Indicator is only as useful as its timeframe and consistent accuracy:
Rydex Funds Nova vs. Ursa - the ratio of Bullish investors divided by Bearish. Recent range boundaries are 16 (Bullish) and 38 (Bearish, with too many optimists).
Option Put/Call ratios: My favorite is the CBOE Equity (shoeclerks) ratio where the high 60s and 70s indicate too much put buying (pessimism) and is therefore Bullish - the new Int'l Securities Exchange (ISEE) index is also tracked for overall sentiment (professional and retail).
Volatility Index, or VIX - a long term signal of complacency, has been in the low to mid-teens for several months and is more a coincident signal rising when markets sell off. It tends to travel in Trading Ranges, starting in single digits (8.8 was the all-time low), then into the 50's after the Millenium shakeout, now making new recent lows @ 12.
Newsletter surveys - various databases of futures traders, newsletter writers and shoeclerks (AAII), although based on what thesy "SAY", not what they "DO", is still useful to follow. Crossovers, where Bearish sentiment rises above Bullish is extremely significant. I watch AAII, Investor's Intelligence, and Market Vane - Bullish Consensus barely moves.
Confidence surveys - Univ. of Michigan and UBS are worth watching for extremes.
Mutual Fund cash - there are several iterations of this figure, whether in Money Market funds, or held back by the manager. Investor's Daily (IBD) has a very slow moving and often adjusted (like government work), but worth tracking for liquidity.
Nasdaq Volume to NYSE - gives the degree of speculation among investors, ranging over 5 years from 79 to 244%.
Barron's Trader's Smith Barney Panic/Euphoria Index just came out in their latest revision of the weekly. It is bounded by -1.5 (Panic) to +1 (Euphoria) now lying within the Panic zone.
My final FEAR VS. HOPE (I prefer Hope to Greed) Indicator is the delayed Public to NYSE Specialist short selling ratio, usually reported 2 weeks later, but useful in a longer trend.

I also combine Momentum Indicators with Sentiment as well as Volume, the tools of a Technical Analyst. These include: McClellan Oscillator and Summation Indices: are more of a momentum Indicator, like Advance/Declines (on which they are based) and New Highs and Lows. I find the shorter term Oscillator bounded by +75 and -100, where approaching these numbers dictate caution.
Finally, I never thought I would see 5% DJIA Dividend again, after the introduction of tech stocks into the Dow 30, but it is here now. 6% is the classic turnaround from a Bear market, with an average P/E ratio of @8 - that we have yet to see.

All of the above information is publicly available for free, from Barron's Market Laboratory, Investor's Business Daily, and websites.

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding. For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance

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SENTIMENT INDICATORS:

MEMORIAL DAY:

A time for reflection - not only on our veterans and fallen heroes, but in my case a suitable time to reinvent my Blogsite for the following reasons: as mktsentiment.blogspot nears its first anniversary, and I feel even more strongly committed to recording and expanding the material, I want to take advantage of the exponential boom in the blogging movement. Every day there are more RSS feed directories and sites to link to, reaching more eyeballs.Although I have been studying Sentiment since my CMT (Chartered Market Technician designation) thesis was devoted to it 10 years ago, it has been validated again recently, just missing (by 1%) the top 10 stock pickers in Barron's annual educators'/students' contest - and outperforming the S&P 500 by @5% over those 3 months. The overall winner, up @50%, also used Technical Analysis of which Sentiment is an important part.
Recent requests for me to speak before groups such as my Technical Analysis local group (tsaasf.org) and Investor's Daily meetup, have reinforced the concept that, since most of a stock's price movement ( up to 70-80%) is due to the strength of the overall market and Sectors/Industry Groups, people are tired of wasting a lot of time analyzing a sea of Fundamental data, yet still cannot outperform a generic index of both good and bad stocks. The '90s saw a huge increase in Information Transparency, lower commissions and spreads, but resulted in the worst stock crash in history because of faulty valuations and corrupt officers and accountants.
The new blogspot.com will also by more user friendly, both in material definition (originally intended for a savvy group of Technicians as an appendage to the TSAA Review and its website currently under revision), as well as opening up the "comments" area (thanks to Haloscan's ability to override Blogger's requirement of membership for commenting). Starting this week I will break down the publicly available Sentiment Indicators I use, and explain their timeframe and accuracy. Please Stay Tuned!

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding. For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance

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MEMORIAL DAY:

Haloscan commenting and trackback have been added to this blog.

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding. For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance

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EXCEPTIONS NOTED:

In 14 out of 18 post-election years (as is this one), from 1913 to the last Bull market start in 1982, there was a Bear market - thereafter for the next 4 (1985 on) we had up markets which came home to roost in 2001. Since we are currently just negative on the year, will we get back to the majority opinion, or will the record of "never down in the 5th year of a decade" become 12 of 12? This week's extremes include: the UBS Investor Confidence Index is at a 2-year low of 50, mostly due to high oil prices; and although the Nasdaq was up 5 days last week, the New Hi to New Lo ratio was negative, indicating a bifurcation somewhere. The McClellan (ratio-adjusted) Oscillator, which usually tops out at +75, has done so lately @50 - this week it ended down to +41, portending ST caution, although the longer term Summation just broke positive, to +39. And the Bullish Percent on the SPX has bottomed out at 50, but is not up 6% (3 boxes on Pt.& Fig.) to warrant a Buy signal.

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding. For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance

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EXCEPTIONS NOTED:

paraskevidekatriaphobia:

Fear of Friday the thirteenth was indeed warranted, at least for the large cap stocks last week. On the contrary, the recent stepchild Nasdaq held up quite well as techs started to breathe life again. Even though several Sentiment Indicators remain (Bullishly) pessimistic, such as aforementioned put/calls, Nova/Ursa, public shorts vs. Specialists, other signs keep the Orange caution light on: all 3 major Indexes are below their 200-day MA, and have slipped into the old, lower Trading Range - 10,400 to 9,700 on the DJIA.
The first quarter of '05 saw record stock Buybacks, which is a market-topping signal; Hedge Funds, which have increased assets to $1T (10-fold since 1994), got whipsawed by Kerkorian's Buy-in and S&P's bond downgrade. Being on the wrong side of both occurrences, we could see another LTCM reaction from some 20-something genii running money by algorithm. New highs on the dollar and a flattening yield curve negating carry-trades aren't exactly helping these poor unfortunates. The Dow 30 dividend yield broke 5% this week and the U. of Michigan Confidence survey hit another new low at 85.3, giving hope of a Summer rally.

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding. For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance

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paraskevidekatriaphobia:

SINKO DE MAYO?:

For years May was the best month of the year for the DJIA; the era before, it was one of the worst, per Yale Hirsch's Almanac. With both the NASDAQ and DJIA below their 200-day MAs and very important Resistance just above, the short term doesn't look that great, after the usual first-of-the-month inflow of money. The SPX (500) of large cap, dividend paying stocks looks healthier, just above its 200-day and resting on the 1163 Resistance-turned-Support. This is also in synch with the NYSE/NAZ Volume ratio, which is at its lower end at 113(non-speculative, ergo Bullish); and, opposable new highs/lows ratios also confirm the buying of large stocks.
One Bullish extreme, rarely cited, is the 52 reading on the UBS Investor Optimism Index, a New low since I've followed it ( 3 years). This could bode well for a big Intermediate term rally later this year. Finally, some other Bullish "tells" are the CBOE put/call ratio at high 74, AAII Bears hitting a huge 44% ( II at 30%), the Nova/Ursa ratio still in a low range at 20, and the Bullish Per cent at a bottoming 52%.

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding. For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance

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SINKO DE MAYO?:

MAYDAY,M'AIDEZ:

Help! Can anyone stop the downward onslaught? April ended with an Income Tax-paying, profit-taking, tape-painting window-dressing cavalcade. At least the sellers stopped, although Volume shows the buyers haven't shown up yet.So far, the most extreme Sentiment reading this week was the Public to Specialist shorting - a huge record-setting 3.67 ratio (if that number is to be believed)- previous 5 year high was 2.57 in August of '04, a Buy point at an Inverse Head & Shoulders re-accumulation pattern (the Head). Sometimes even the IBD can put up a bad number - we'll have to see if other Indicators similarly support this event.
The Investors Intelligence survey shows a recent record high of Bears at 29.7, and odd-lot short sales jumped up, confirming the above Specialist ratio. Another recent record is the U. of Michigan Confidence at 87.7, lowest since Sept. of '03. At 51, the Bullish per cent of stocks on a Buy signal is down 35% from its Dec.31 high - a market top. The AAII (shoeclerks) Bull/Bear survey is inverted - rare, but welcome to bulls - at 29.8/34.7.
May used to be a very good month, at least for the Dow 30 which are large-cap, dividend-paying stocks. Let's hope for at least a short-term rally here as first-of-the-month money comes in.

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding. For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance

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MAYDAY,M'AIDEZ: