Market Indicators - Investor Sentiment

Top 364. Feb 12, 2001 4:32 PM

» SteveT - More

Investors Intelligence survey as reported in Barron’s 2-12-01.
Bulls/(Bulls+Bears)
Last week Bulls 61.8 Bears30.4 Correction 7.8 =67.03
Two weeks ago Bulls 61 Bears 31 Correction 9=67.03
Three weeks ago Bulls 56.8 Bears 32.4 Correction 10.8=64.4.

Sideline money=Bears+Correction

Last week 38.2
Two Weeks ago 40
Three Weeks ago 43.2

-- posted by SteveT

Top 365. Feb 18, 2001 5:59 AM

» SteveT - 2-19-01 Sentiment

Another wild week on Wall Street for sure. It would seem many people say they are bullish but something gets in the way, maybe all those sellers. Here are the sentiment numbers from the 2-19-01 Barron’s

Bulls 57.8 Bears 30.4 Correction 11.8.

57.8/(57.8+30.4)=65.53%
Four week average=66%

A few more historic dates
7-20-98 68.42%
10-12-98 47.41%
4-3-00 67.79%
1-1-01 64.10%

Sideline Money =Bears + Correction = 42.2%
Four week average=40.9

-- posted by SteveT

Top 366. Feb 25, 2001 8:47 AM

» SteveT - 2-26-01

The S&P 500 closed Friday at a new low in this nasty correction. It will be interesting to see if we get a significant move next week. Current Investors Intelligence sentiment numbers from Barron’s 2-26-01.

Bulls 61.2 Bears 28.6 Correction 10.2
61.2/(61.2+28.6)=68.15%
Four week average = 66.98

Sideline Money =Bears + Correction = 38.8 %
four week average = 39.55%

-- posted by SteveT

Top 367. Mar 3, 2001 7:37 PM

» JenL_2 - Investor Sentiment

This from 3/5 Barron's:

Survey Says

A drop in bullish sentiment may signal an imminent market rally

By Erin E. Arvelund

"The only thing we have to fear is the absence of fear itself."

If Franklin D. Roosevelt had spent his career in Wall Street instead of the White House, these are the words he would have made immortal. When investors are fearless and complacency reigns in the market -- recall the 1920s and, yes, the late 1990s -- stocks almost always are poised to fall.

Today, however, fear has the upper hand on the Street, according to many of the surveys that measure bullish and bearish sentiment among traders, investors and market newsletter writers. Indeed, several prominent polls last week reported that the percentage of bullish respondents had dropped to extreme lows, signaling that a powerful rally likely is in the offing.

Why are such sentiment surveys best read as contrary indicators? When people feel most upbeat about stocks, they're usually fully invested. Conversely, when they're morosely bearish, they're out of the market and hoarding plenty of cash. "The herd perpetually drives prices to optimistic and pessimistic extremes," says Woody Dorsey, founder of Market Semiotics.

Investors track dozens of sentiment indicators, including mutual-fund flows, volatility and industryspecific statistics. Here's a look at the recent readings of some historically prescient surveys.

Investors Intelligence conducts a weekly poll of about 130 market newsletter writers, and calculates the percentage who are bullish, bearish or expecting a short-term correction. During most bull markets the survey averages 45% bulls and 35% bears.

Earlier this year, II, as it's called, hit its most bullish reading since 1987: 61.8%. Last week bulls numbered 57%, while bears totaled 11.7%. "The II index has been above-average for bulls and below-average for bears," says Michael Burke, editor of Investors Intelligence. "The market was looking at a lot of optimism ahead of the Fed's rate cuts."

Burke is contemplating a second survey that would track investors' feelings about the Nasdaq. II's persistently bullish readings confound some observers. "Normally, when the market has been doing this badly the number of bears 1/8 in the II poll 3/8 picks up," says Sam Burns, an analyst with Ned David Research.

Thanks to the Internet, the American Association of Individual Investors now polls its 170,000 members daily. Respondents indicate how they feel about the market's performance in the next six months. A 65% bullish reading suggests a coming correction; a 25% bullish reading signals a rally ahead.

Bullish sentiment shot up to 46% last week from 26%. Bears remained relatively unchanged at about 34%, but the neutral camp was nearly halved. Critics such as Jerry Wang, of Shaeffer's Investment Research, charge the AAII survey has lost some validity since it went online, perhaps because fewer people participate and responses have grown more volatile. But AAII President John Markese stands by the indicator, noting that its bullish reading ramped up to 75% at the start of 2000, just before the market peaked.

Consensus Inc.'s index of bullish Market Opinion tracks sentiment among more than 100 newsletter writers and brokerages weekly. The firm deems a bullish reading of 75% "overbought", and a 25% bullish reading "oversold". Only 22% of respondents were bullish last week. "A lot of anxious analysts think this has to be a bottom," if only a temporary trough, says Robert Salva, publisher of Consensus. The firm's market indicator has been fairly accurate in calling tops. It posted a bullish high of 62% in January 2000 and again in August 2000, just prior to big downturns.

Market Vane's bullish consensus has been published since 1964. The firm queries commodities traders and investors in Standard & Poor's 500 futures contracts. Just 25% of all respondents were bullish last week, right around the low of 23% seen in May 2000. That year, the market enjoyed a strong summer rally, and history could repeat. Generally readings below 25% are bullish; those above 65% are bearish. The percentage of bulls hasn't topped 39% since the November elections, says Richard Ishida, president of the Pasadena, California, company. "We're looking for a bear-market rally," he concludes.

Lehman Brothers technician Jeff deGraaf uses Market Vane in conjunction with the Commitment of Traders report put out by the Commodity Futures Trading Commission. Professional traders, he notes, generally invest at market bottoms and short at tops.

The CBOE compiles an equity put-call ratio-the total volume of equity put options divided by call options. Readings of 0.60 are considered bullish and of 0.30 bearish, because nervous investors rush to buy protection in the form of puts. The ratio generally indicates the market's direction in the next two weeks. "It's popular because it's accurate," says Jerry Wang. It's always the first thing we look for." Last week, the put/call rocketed to 0.81 -- in other words, a hopeful sign.

In January of this year, U.S. brokerage strategists were more bullish than at any time in the past 16 years. Their average asset allocations form the basis of a survey compiled by Richard Bernstein, chief quantitative strategist at Merrill Lynch, who correctly viewed the current reading as worrisome for the market. Strategists at the top Wall Street firms advised investors to keep 66.4% of their assets in stocks.

Bernstein terms any reading below 50.5% a buy signal, and any above 58.3% a sell. His indicator hit sell levels for the past year, during which bonds and cash both outpaced stocks, and is best interpreted as a 12-month forecast.

Its the Thoughts That Count

Here's a look at some of the most prominent surveys of stock market sentiment. Most reflect a steady drop in bullish views over recent weeks. These results are best viewed as contrary indicators. When they signal extreme optimism, stocks are likely to fall because bullish investors already have bid up prices. Conversely, at times of extreme pessimism, bearish investors have sold their holdings setting the market up for an imminent rally

SentimentIndicator	Recent Trend	Methodology
American Assoc.of Individual Investors	Bullish readings have been around 25% in recent weeks, but last weekhit 46%	Daily poll of members
Consensus	A month ago bullish readings moved up to the 50% range, but since havefallen to 22%.	Weekly poll of newsletter writers and brokerages
Investors Intelligence	Bullish readings have hovered around 55% for the past eight weeks.	Weekly poll of newsletters writers
Market Vane	Bullish reading climbed to 32% in late Jan., but now stands at 25%	Daily tally of buy and sell recommendations of brokerage and investmentadvisors (covers equity and commodity markets)
CBOE Equity Put-Call	Equity ratio has been rising, but not to levels seen late lastyear.	Daily ratio of equity puts versus calls on the Chicago Board OptionsExchange
Wall Street Strategist Asset Alloc. Survey	Equity allocations have increased to 66%.	Monthly average of Wall Street *strategists' asset allocations

(Compiled by Richard Bernstein, quantitative analyst at Merrill Lynch;available through Merrill Lynch) Sources: Company reports and Ned DavisResearch.

Subscribe to WSJ & Barron's Online @ http://www.wsj.com

…..Jen

-- posted by JenL_2

Top 368. Mar 4, 2001 5:51 AM

» SteveT - 3-5-01 Sentiment

Yet another new S&P 500 low in this correction we have been experiencing. The NASDAQ is at levels not seen in over two years. So why so many Bulls? Could it be investors are waiting it out knowing better days are to come? More questions than answers to be sure. Here are the current Investors Intelligence numbers from the 3-5-01 Barron’s

Bulls 57.4 Bears 30.9 Correction 11.7

57.4/(57.4+30.9)= 65%

Four Week Average = 66.44%

A few more historic dates

7-20-98 68.42%
10-12-98 47.41%
4-3-00 67.79%
1-1-01 64.10%

Sideline Money =Bears + Correction +42.6%

Four Week Average 40.45%

-- posted by SteveT