Market Indicators - Investor Sentiment

Top 1004. Oct 8, 2005 7:28 PM

» allancoleman - American Association of Individual Investors

for those of you interested , AAII has an excellent life time membership fee of $390 . i joined under their life time plan several years ago for alittle less and it's a good deal for those who tire of paying every year for investment advice .

you can sign up for one year , try them out , and get a break on a life time membership too at that time if you want . i look forward to the next 30 years + of getting this stuff at no additional expense .

http://www.aaii.com

try them . i think you'll like it .

-- posted by allancoleman

Top 1005. Oct 8, 2005 10:59 PM

» Normxxx - Re: American Association of Individual Investors

In response to American Association of Individual Investors posted by allancoleman:

Excellent investment! You can't go wrong. (I bought a lifetime membership several years ago, and while I never seem to have the time to read theirs or any other magazines, I collect them assiduously.)

-- posted by Normxxx

Top 1006. Oct 9, 2005 6:08 AM

» allancoleman - Re: American Association of Individual Investors

In response to Re: American Association of Individual Investors posted by Normxxx:

glad you like it too Normxxx . i give all my issues away after making a copy , for reference , of particular articles for my own personal use later .

wish more people , like bob brinker or sy harding , would consider lifetime subscription fees .

-- posted by allancoleman

Top 1007. Oct 9, 2005 6:09 AM

» SteveT - October 7, 2005 Sentiment

I am using the VTO report for the II data. http://vtoreport.com/sentiment/sentiment...
Note for clarification historic sentiment tables are for that current week and not the four-week moving average.

Investors Intelligence Bulls 49.5% Bears 27.8% Correction 22.7%
49.5/(49.5+27.8) = 64.04%
Four Week Average = 66.37%


A few historic dates:
7-20-98  68.42%
10-12-98 47.41%
4-3-00   67.79% 
1-1-01   64.10%
4-4-01   58.91%
9-17-01  52.0%
9-21-01  48.7%
7-19-02  47.2%
7-23-02  47.2%
10-9-02  50.0%

Sideline Money Bears + Correction =50.5%
Four Week Average = 47.45%
hairie has researched some fascinating numbers for all time high bulls readings going back to 1965. http://www.suite101.com/discussion.cfm/i...
and lows from 1965-2003 http://www.suite101.com/discussion.cfm/i...

From Barron' s 10/10/05
The American Association of Individual Investors
Bulls 50% Bears 27.4% Neutral 22.6%
50/(50+27.4) = 64.6%
Four Week Average = 57.52%

Historic dates for comparison:
7-16-98 44.3% S&P 500 Close 1186.75
10-12-98 36.76% S&P 500 Close 984.39
4-3-00 77.78% S&P 500 Close 1505.97
1-1-01 58.82% S&P 500 Close 1320.28
4-4-01 51.35% S&P 500 Close 1103.25
9-10-01 47.34% S&P 500 Close 1085.78
9-17-01 42.11% S&P 500 Close 1038.77
9-21-01 41.08% S&P 500 Close 965.80
7-19-02 32.88% S&P 500 Close 847.75
7-23-02 32.88% S&P 500 Close 797.70
10-9-02 42.36% S&P 500 Close 776.76

Sideline Money Bears + Neutral = 50%
Four Week Average = 56.8%
For more info on AAII check out their web site. http://www.aaii.com

As of October 7, 2005 close
The CBOE Put/Call ratio 10 day moving average is at .91. http://stockcharts.com/def/servlet/SC.we... The VIX Market Volatility Index closed Friday at 14.59. http://quote.yahoo.com/q?s=%5evix&d=t

-- posted by SteveT

Top 1008. Oct 9, 2005 8:41 AM

» allancoleman - Re: Re: October 7, 2005 Sentiment

In response to Re: October 7, 2005 Sentiment posted by Kirk:

really apprecate you posting your accurate YTD performance Kirk showing you at 3.1% .

my performance YTD in my ' invested ' portfolio ( minus real estate & living expenses ) is +3.36% and my YTD performance in my total portfolio ( counting real estate & living expenses ) is +3.74% . so it is possible using market timing and being out of the stock market in corrections , to beat those who are more invested in the stock market .

i also realize that because you are willing take more risk that you'll probably more than beat me at the end of the year . also thanks for allowing me and others here to learn . good luck on selling subscriptions . smile .

-- posted by allancoleman

Top 1009. Oct 9, 2005 12:29 PM

» Normxxx - Re: Re: October 7, 2005 Sentiment

In response to Re: October 7, 2005 Sentiment posted by Kirk:

I wonder if Normxxx would agree with me that “The Final Top” before a massive bear market will probably come when sentiment exceeds 90%. We’ve never broken above 80%, so 90% is still a long way away. Given the market goes up about two thirds of the time, I actually consider the “baseline” for sentiment to be 67%, which amazingly, the graph has as its rough average over the period I show!

Indeed, I do agree that everyone is getting too gloomy, too soon. In fact, I am now getting antsy about that "recession in '06," which I have been predicting for over a year, now that almost everyone seems to agree. However, I don't see how we can avoid that. But we may yet get a really good rally (we may get to to 1280, yet, Dan), just to shake out the novaBears and suck on some more bulls, and get a big crash in November/December (out of 'season'), just before a (feeble) Christmas rally.

Alan Abelson's Column in Baron's says:

"Where does that leave the market? Probably right where it was— namely, shaky. But since that has been our diagnosis for it seems like an eternity, we thought it might be worthwhile getting a second opinion. So we did, from an old pal who has been keeping tabs on the market ever since he was a pup (and that was quite a few years ago). Not the least of his virtues is that he shuns publicity, which means that only his clients (a select, savvy and rich bunch) and the occasional accidental kibitzer (like us) are privy to what he thinks.
"OK, OK— we hear you— what does he think? We should note, incidentally, that he's the last of the great contrarians (while just about everyone else was beating the drums for a burst upward, he cautioned that September would see a weak rally -- and so it did). Our friend is one of those strange people with the capacity to read the entrails of the market— new highs, 200-day moving averages, that sort of arcana— and what he sees is a mean shakeout this month, followed by a rally that might carry into next year.
"But that rally, he feels, will be just another of the bear-market rallies of various intensity and duration we've been witness to these past several years and, at some point in '06, stocks will begin to go down again big time and the bear market resumes in earnest. Keep in mind, he urges, if and when you choose to play the rally, that big investors, a famously edgy crew, likely have taken a lot of short-term profits this year, which means that they could be eager for offsetting losses to shield those profits from the grasp of the tax collectors. Hence, any number of beaten-down stocks that seem like raging bargains may get even more beaten down as the pachyderms unload.

-- posted by Normxxx

Top 1010. Oct 9, 2005 9:27 PM

» Normxxx - Housing Market Ills

Contrarian Chronicles: Waking up to the housing market's ills

By Bill Fleckenstein | 9 October 2005

Even the New York Times has realized the housing boom may be ending. Their evidence: flat or falling prices, unsold homes and too many real-estate agents.

A longstanding theme of mine -- the creaking of the housing ATM -- became above-the-fold, front-page news on Oct. 4, when The New York Times published a story headlined "Slowing Is Seen in Housing Prices in Hot Markets." Allow me to share a couple of nuggets, starting with this:

"A real-estate slowdown that began in a handful of cities this summer has spread to almost every hot housing market in the country, including New York."

Why we're gagging over real estate

Okay, class, when did Time magazine put "Home $weet Home: Why We're Going Gaga Over Real Estate" on the cover?

Answer: Its June 13 issue. As I noted then, though it seemed almost impossible that Time could be nailing a top once again, Time had in fact nailed the RE top!

The New York Times story had plenty of gory details about New York real estate, including an interesting chart showing that, year-over-year, the price of virtually everything on a per-square-foot basis is up. But now, so are :

The number of days that properties sit on the market.

The number of properties for sale.

In light of those two data points, unless some macroeconomic tailwind comes, the next step is going to be lower prices. Given the fact that we've experienced such a mania, I don't even think that lower interest rates could restart this boom— just as 13 rate cuts between 2001 and 2003 didn't really matter to the stock market until prices had collapsed and the cumulative effect of those cuts and other stimuli managed to get the market moving again.

Who moved my mania?

Back to the story, writers David Leonhardt and Motoko Rich note that "some of today's sellers appear to be pricing their homes as if the frenzy were continuing." But as a Massachusetts real-estate agent said, "Their neighbors sold their house when the market was red-hot, and everybody thinks their house is better than their neighbor's house. But when the neighbor sold, there may not have been five other houses on the market." Of course, that is the supply problem I just cited.

Segueing to the oversupply-of-real-estate agents department, the article reprised what would be a humorous anecdote— if it wasn't destined to be so serious— about the flood of newbies into that community: Observed a 20-year veteran real-estate agent in Frederick, Md.: "I've gotten these calls from newer agents saying, 'I've had this property on the market for 60 to 90 days. What do I do?'" His advice: "It's called, 'Reduce your price.'"

Once sellers start to reduce their prices, the process will likely feed on itself. But some time may elapse between when the market peaked, as it did this past summer, and when the damage becomes universally apparent and precipitates the appropriate behavior modification.

The mop-up after the mania

Though that time lag is not knowable at this juncture, we do know that folks have been living beyond their means via the housing ATM. We also know that consumers face huge headwinds, not least of which will be the psychological fallout from the creaking housing market. Potentially, that could engender some angst— even before the consequences of lower prices begin to bite them seriously.

Tapped-out consumers will fuel a recession. And, as the real-estate market worsens, we'll see bad debts and bad assets in the financial system. (It's not yet knowable if the rate of this incipient deterioration will accelerate or stay the same, though I doubt it will decrease.)

As if to foreshadow that outcome, last week saw considerable weakness in the stocks of companies that draw nourishment from the housing-ATM food chain. That includes "Fanron"— Fannie Mae (FNM), Washington Mutual (WM), and MGIC Investment (MTG).

Trouble stalks tech

During the recent market dip, chip stocks have been a port in the storm. As beneficiaries of the inventory build now under way, many of them will be immune this quarter to margin-pressure problems— something I discussed last earnings season and something I think we'll hear a lot more about as we progress through the upcoming earnings season. In any case, whether those chips get sold won't be knowable for a while (though I have my suspicions), which is why I am not short any chip stocks, with the exception of Intel (INTC).

Less black ink for Lexmark

However, from an end-demand standpoint, I think technology will be in for plenty of pain. Lexmark International (LXK) saw that in spades last Tuesday. The shares slid about 30% after the company announced that although its third-quarter sales would only be about 4% to 5% below what had been expected. Its earnings will likely be halved. Lexmark cited problems with end demand and pricing. It also lowered fourth-quarter guidance.

Dell (DELL), too, could be headed for a big miss (and not just the penny-light variety of its past stumbles). Recently, the company announced its abandonment of the low end of the PC market. I think that the vaunted Dell "model" is slowly unraveling before our very eyes, and I would expect to see some big hiccups in the next couple of quarters.

Negative news notwithstanding, many people continue to expect the market to rally for the rest of the year— just because it happened to rally in the fourth quarter of last year. My expectation is otherwise. The collective weight of their "bets" going sour could quickly precipitate violent action, should we get any momentum to the downside.

______________

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

The content of this message is not to be construed as constituting market or investment advice. It is intended for educational purposes only. Individuals should consult with their own advisors for specific investment advice.

-- posted by Normxxx

Top 1011. Oct 10, 2005 7:33 AM

» bob90245 - Re: Housing Market Ills

In response to Housing Market Ills posted by Normxxx:

the creaking of the housing ATM

What does "housing ATM" mean? I haven't found the author's definition in the article.

-- posted by bob90245

Top 1012. Oct 10, 2005 7:46 AM

» BoltonCT - Re: Re: Housing Market Ills

It must be a metaphor for a cash machine where the owner takes the equity value out of the house by refinancing until they get in trouble when the price goes down mand they can no longer borrow but are still overspending. Then they have to hunker down... hence a drop in consumer demand tied to the housing decline.

-- posted by BoltonCT