Market Indicators - Investor Sentiment

Newsmagazines' Cover Stories Bear Watching

Top 371. Mar 21, 2001 9:54 PM

» JenL_2 - The Magazine-Cover Indicator

This from 3/21 LAtimes.com (pics and links added):

By JOSH FRIEDMAN

Stop the presses: The bear market might be over.

Or not.

All three major U.S. news magazines feature the ravaged stock market and the faltering economy on their covers this week. And that means the so-called magazine-cover indicator--which postulates that the worst is probably over for Wall Street once the mainstream media discovers a bear market--may be coming into play.

Screams Newsweek: "The Economy--How Scared Should You Be? The Market's Wild. Confidence Is Shaky. What You Can Do Now."

<img src="/files/mysites/Jen/newsweekcover.gif" width=158 height=94>
http://www.msnbc.com/news/545993.asp

U.S. News & World Report, whose cover depicts a growling bear, asks: "Bear Trap: Will Tech Stocks Sink the Rest of the Market--and the Economy?"

<img src="/files/mysites/Jen/usnewsbearcover.jpg" width=115 height=136>
http://www.usnews.com/usnews/issue/01032...

Time has the most optimistic take: "Looking Beyond the Bear: Yes, It's Scary Out There, but a Recession Isn't a Sure Thing. Here's Why." Its cover also features a growling bear--but this one, sporting business attire and carrying a cell phone, borders on cute.

<img src="/files/mysites/Jen/timescover.gif" width=158 height=160>
http://www.time.com/time/magazine/articl...

Analysts say the covers are encouraging as a "contrary" signal--but far from conclusive. Contrary indicators, which look at such things as investor sentiment surveys and mutual fund redemptions, can predict market turnarounds on the theory that when the bad news is already out there among the masses, it can't get much worse.

"We're finally starting to see the gloom," said James Stack, president of Whitefish, Mont.-based InvesTech Research. "But the press is still posing the question about a recession without reaching the conclusion."

U.S. News Managing Editor Brian Kelly said he has never heard of the magazine-cover indicator.

"It makes sense," he said with a chuckle. "Like the notion that when your barber is buying stocks it's time to sell. I'm perfectly willing to believe that when a bunch of magazine editors in a room all agree on something, it must be so obvious that it's months old."

But he said news judgment dictated that the stock market be this week's cover story.

"By definition, the broad market crossed into bear territory last week. One of the things we do is to mark moments, and the bear market is a big moment."

Time Managing Editor Jim Kelly said he hopes the magazine indicator is on the money.

"There's also a Time cover curse," he noted. "We had Amazon.com's CEO, Jeff Bezos, as Man of the Year in December 1999 and that stock proceeded to drop like a rock. As an investor, I sure hope Jim Stack is right."

Stack said the magazine indicator has generally worked, calling the market bottoms of 1969, 1974 and 1990 within a month or two. It may work, he said, because stubborn investors may throw in the towel when all they read in the media is that they could lose an additional 50% or so. That can signal the "capitulation" that many analysts look for as evidence that selling finally has been exhausted.

But in 1981, Stack said, the grim headlines came about nine months before stocks bottomed, as high interest rates prolonged the pain.

One of the most famous bearish magazine covers was Business Week's "The Death of Equities," published in August 1979. The news was premature: The Standard & Poor's 500 index gained a healthy 17% in the next 12 months.

Stack said he would expect definitive recession headlines this time around if the government's consumer confidence statistics due out March 27 look weak. "We may be close to the end, but clear evidence of a recession could take the Nasdaq down to new lows," he said. "Then the conclusive headlines would come as the market bottoms out."

I think we should make a list of URSA sightings.....Jen

-- posted by JenL_2

Top 372. Mar 26, 2001 3:00 PM

» SteveT - 3-26-01 Sentiment

WOW what a week! I was pretty sure the numbers this week would be more Bears in this week’s survey from Investors Intelligence's. Instead we have little change in the correction group. But a slight rise in Bulls. I believe this survey was taken last Wednesday the day of the closing low so far smile

From the 3-26-01 Barron’s

Bulls 51.6 Bears 30.9 Correction 17.5

51.6/(51.6+30.9) = 62.55%

Four Week Average = 59.33%

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=48.4

Four Week Average = 46.73%

-- posted by SteveT

Top 373. Mar 26, 2001 6:03 PM

» SteveT - Re: AAII Sentiment

In response to message posted by Kirk:

Good idea Kirk. Anybody know where to get some historic data on the AAII. In comparing the two surveys it would seem a real difference of opinion . Or are those "pros" telling us they are bulls when they are really Bears? Now why would they do that? Hmmmmmmm.

-- posted by SteveT

Top 374. Mar 27, 2001 9:34 AM

» bullbear - ARMS index vs. Investors Intelligence

I think it would be helpful to know what the investors intelligence indicator (bulls vs bears) was historically when the ARMS index hit 1.3. Does anyone know how I can get this info?

-- posted by bullbear

Top 375. Mar 29, 2001 9:01 PM

» par_five - Comitment of Traders Report

Can anyone here help me find some info on how to interpret the Commitment of Traders Report that is released by the Commodity Futures Trading Commission. I understand that this data will show what the "smart" money is currently doing. I have some links to sites that present the data, but I am unsure how to use it. Anyone interested in this subject please respond here and hopefully we can learn more about what I think is a very useful sentiment indicator

-- posted by par_five

Top 376. Mar 31, 2001 5:48 PM

» SteveT - 4-02-01 Sentiment

Things have changed a little this week the Bulls are under 50% and we have a noticeable rise in Bears. Fewer are expecting a correction. What does all this mean? I will leave that to you. This from Barron’s April 2, 2001. Investors Intelligence survey.

Bulls 48.9% Bears 38% Correction 13.1%

48.9/(48.9+38) = 56.27%

Four week average 60.21%

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
38+ 13.1= 51.1%

Four Week Average = 48.85%

American Association of Individual Investors tracks sentiment too. They view things a little differently.
Bulls 37.3 Bears 27.5 Neutral 35.3

37.3/(37.3+27.5) = 57.56%

Four Week Average = 47.2%

Sideline Money Bears + Neutral = 62.8

Four Week Average = 58.88%

www.aaii.com

-- posted by SteveT

http://www.suite101.com/discussion.cfm/i...

Top 377. Mar 31, 2001 11:36 PM

» JenL_2 - Re: ARMS index vs. Investors Intelligence

In response to message posted by bullbear:

Hi bullbear - Welcome to the group! Did you see Don Hays's ARMS index discussion in 4/2 Barron's? It's posted to the "Don Hays" thread:

.....Jen

-- posted by JenL_2

http://www.suite101.com/discussion.cfm/i...

Top 378. Apr 3, 2001 6:45 AM

» JenL_2 - Re: ARMS index vs. Investors Intelligence

In response to message posted by bullbear:

More on the Arms Index & Bear Market Bottoms
in Alan Abelson's article, "Drawn & Quartered" in 4/2 Barron's pointed out by RonJ and posted to the "TA" thread:

.....Jen

-- posted by JenL_2

http://www.thestreet.com/metrics/sentime...

Top 379. Apr 5, 2001 9:18 AM

» JenL_2 - Re: AAII Sentiment

In response to message posted by SteveT:

This post copied from the "BB Discussion" thread. There's a chart at TSC of the AAII Sentiment Survey - 2001.

Author: ACousins
Date: April 5, 2001 8:53 AM
Subject: More bears but bulls haven't capitulated

I guess those fence-sitting humpty dumptys fell into the bear camps (or were mauled and pulled in)

-- posted by JenL_2