Market Indicators - Investor Sentiment

» Normxxx - Re: Re: Still Another Vote For The BULLs

You missed where he claims to have been bullish since March!

-- posted by Normxxx

» SteveT - 11-10-03 Sentiment

Investors Intelligence Bulls 56.3% Bears 21.4% Correction 22.3%
56.3/(56.3+21.4)=72.46%
Four Week Average = 72.85%

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 =43.7%
Four Week Average = 43.13%
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 11/10/03
The American Association of Individual Investors
Bulls 57.6% Bears 16.8% Neutral 25.6%
57.6/(57.6+16.8)= 77.42%
Four Week Average = 77.62%

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

As of November 7, 2003 close
The CBOE Put/Call ratio 10 day moving average is at .74. http://stockcharts.com/def/servlet/SC.we... The VIX Market Volatility Index closed Friday at 19.93. http://quote.yahoo.com/q?s=%5evix&d=t

-- posted by SteveT

» hairie31 - Correction on VIX

Steve,

I think you made a typo on the VIX number. It closed at 16.93 on Friday, not 19.93.

Hairie31

-- posted by hairie31

» SteveT - Re: Correction on VIX

Hairie, right you are. I got it right in my spreadsheet. Just typed it wrong. Thanks for catching that.

-- posted by SteveT

» Normxxx - BULL or BEAR? You pays your money and takes your choice.

Wonderful World  full text
by Robert Helgason

"And I think to myself, what a wonderful world..."

In this weeks wrap-up -
In this weekends newsletter we will cover

1. Fundamentals - Weekly Recap
2. The Current Technical Outlook -
2.a. Short term Perspective - Channels, Indicators, Counts
2.b. Long term Perspective - Elliott Counts, and some targets
2.c. Gold and Silver
2.d. Leaders and Shakers
3. Sentiment Indicators
3.a. Volatility Studies - VIX
3.b. Put / Call Ratio
3.c. Summation Ratios and other Oscillators
3.d. Commitment of Traders
4. Conclusion

Sentiment

"Why aren't the markets rising?" is the question that just surpassed "what stock should I buy" as the most asked question of the week here on campus. The situation is no doubt perplexing with GDP coming in at a hefty 7.2%, unemployment recording it's first reversal in a long time, with the markets sagging on the news. This is all very reminiscent of all the horrible news coming out 9 months ago, that the market just discounted and rose 150 points on.

CNBC tells us that "the good news is already priced into the market, and investors are worrying about how sustainable this rise is." To a degree I would agree with them and would in a way applaud whoever came up with that for thinking of it. Sustainability is a big issue, since a lot of the GDP gains can be attributed to one time factors such as child tax credits, the mortgage boom, tax cut, and the generous liquidity flood from the FED, that had to find a home somewhere. Unemployment is also questionable, as I mentioned above, requiring a large amount of new jobs every month just to sustain our current levels. However, the market is forward looking, due to the fact that everyone is trying to out guess, and get in and out of the market ahead of everyone else, which would therefore suggest that investors are not expecting many blockbuster reports to be coming out in the coming weeks. Seems that people (as in the big investors) are becoming wary of buying at a top despite the bullish seasonality.

Could it be? Are investors a little bearish?

Being a 'contrarian' investor, this leaves me to wonder what side of the market I should be on - what is the real sentiment of the market at the moment.     more ...

-- posted by Normxxx

» hairie31 - Vickers Sell/Buy Ratio: 5.87

-- posted by hairie31

» Normxxx - Anyone for 2004?

November 13, 2003: 8:43 AM EST
By Justin Lahart, CNN/Money Senior Writer

NEW YORK (CNN/Money) - The cheering for the stock market is moving from a low rumble to shout.

Any sentiment indicator you look at, it seems, shows that investors think everything is coming up roses. Investor surveys are decidedly cheery, regardless of whether the investors you're surveying are individuals or pros.

Options market indicators, like put/call ratios and the Chicago Board Options Exchange's Volatility index, show that there is very little interest buying downside protection these days. But who needs such protection, since the market is going up? According to Yale professor Robert Shiller's latest poll, 90 percent of institutional and 93 percent of individual investors believe that the stock market will be higher than it is now in 12 months time.

Meanwhile, a Securities Industry Association's annual survey shows that individual investors expect a 10 percent return in 2004.

It's the sort of stuff that sticks in the craw of James Montier, the intensely bearish global investment strategist at Dresdner Kleinwort Benson.

"10 percent equity returns? Dream on," he said. "The market isn't even vaguely priced for those returns. Everywhere I look, all I see is complacency or outright optimism."

Everywhere, that is, except corporate suites. Company insiders have been scuttling stock at a brisk pace. According to Thomson Financial, corporate executives sold $3.2 billion worth of their companies' stock last month compared with purchases of just $52 million worth of stock. That put Thomson's dollar sell-buy ratio at $59.01 -- the highest level it's been at since Thomson started tracking it.

"The corporate sector -- the guys who are supposedly in the know -- they're all selling," said Montier.

To be fair, those insider sales may not indicate that corporate executives are bearish about their companies' share prices, but rather that the long bear market taught them how dangerous it is to keep all your eggs in one basket. [Normxxx Here:  But they sure never behaved this way after any bear market before, at least since 1960. ] But this lesson of diversification appears to have been lost on many investors, who are back to buying their old favorites from 1999. And in any case, high levels of investor optimism and high levels of insider selling have historically been a dangerous mix, a sign that the market is at increased risk to some sort of selloff.

But for now, at least, that selloff may not come. The Dow is within spitting distance of 10,000 again, and institutionally there is a strong desire to see it close the year above that mark. If that happens, there could be big inflows into mutual funds in January, as individual investors rejigger their 401(k)s, make IRA contributions, and put year-end bonus money to work.

Will they be left holding the bag? That's a 2004 story.

-- posted by Normxxx

» Normxxx - Gut Check Time for the Markets - Gold, Dollar, Stocks ...

By: Christopher Temple, The National Investor

Several trends have been evident during much of 2003; trends which have made believers a pile of money. If you bet on a declining dollar, you’ve been a winner almost any way you’ve played the greenback’s decline, be it in the commodities area, foreign currencies or foreign government bonds. If you’re a gold bug and have acted on this conviction you’re also happy, with gold now up better than 50% from its lows and gold stocks still in a torrid up trend.

Even stock traders on Wall Street have had reason to feel giddy. Massive injections of liquidity by the Fed and Uncle Sam have goosed earnings, economic activity and stock prices. Though stocks have weakened a bit over the last few days, they remain near their highest levels in almost two years.

The $64,000 question now is whether these various trends will continue or not. Gold and stock bulls together with dollar bears must look anew at the reasons why their chosen trades have done well thus far. More so, they must ask themselves whether the confluence of factors they’ve ridden to profits might now be changing, and whether their best course of action is to start taking some money off the table (after all, as the old saying goes, bulls make money and bears make money—but pigs get slaughtered.)

In short, it’s time for some realism—and for a “gut check.

GOLD’S DRIVERS: We’ll start with gold, which just a short time ago saw its highest close yet in New York, settling out on the cash contract at $394.20 per ounce, up $6.60 on the day. Earlier, gold hit an intra-day high of $397.00.

Technically, gold could hardly have behaved better over the last few weeks. On several occasions it managed to establish its own “Maginot Line” in the $368-370 per ounce area during the first half of October. Since then—and notably in spite of continued strength for stocks—gold has gained some momentum, now with the $380 per ounce level as near-term support. This has put added pressure on the previous overhead resistance in the $392-394 area (hit three times over the past month and a half.)

$400.00 gold has seemed just as elusive as a sustained gold price above the $325-330 level did for the second half of 2002.

I for one remain concerned that the Federal Reserve—perhaps joined by other central banks—will make additional attempts to defend their own Maginot Line. As we know from past experience, the Fed has significant means at its disposal to do this. As for the others, one possible means to take some wind out of gold’s sails could be an earlier-than-expected announcement of a renewing of the 1999 Washington Agreement.

[A]mong other things, central banks are petrified of a new breakdown in the dollar’s value. That could be postponed for a while if gold is held in check: after all, these folks fully realize that a surge in gold well above the $400 level could just as easily cause a dollar plunge as be the result of one.

THE DOLLAR: If gold’s technical behavior of late has provided a bullish picture, that of the U.S. dollar is the opposite. In spite of Wall Street’s surge and the recent plethora of seemingly bullish news for the U.S. economy, the greenback has failed to benefit. In textbook fashion, in fact, the dollar last week failed to move above its 50-day moving average and has weakened further.

Until now, the dollar has resisted an all-out bloodbath due both to the perception that the U.S. is still the major “growth” play among developed nations, and to the massive intervention by Asian central banks. As one famous saying goes, though, “Whatever can’t last, won’t.” The U.S. current account and budget still bleed torrents of red ink. The allegedly fiscally conservative Bush Administration is borrowing and spending at this country’s greatest rate since Lyndon Johnson’s Great Society. Last but not least, one can’t help but be concerned that the increasing turmoil in the Middle East might take on an even nastier character.

Having failed to break out of its downtrend, the dollar may next “challenge” its bear market lows. Whether those are broken sooner rather than later, the handwriting is on the wall, however; and the dollar bears, of all our groups of investors doing a new “gut check,” have the most reason to remain confident that their play will go on for some time to come.

STOCK TRADERS WONDER: Having already priced in all the recent economic news—and arguably much more—some stock market bulls are undergoing their own search for the meaning of life in November, 2003. Better news on jobs and economic growth failed to move the markets last week to convincing new highs. The bulls, as I quipped in my November issue are behaving a little like a dog who’s been chasing a car, has finally “caught” it, and doesn’t know what to do with it.

It’s sinking in to at least a few that the “growth” spurt of the third quarter was a one-time event made possible by tax rebate checks and a peak in refinancing activity. With households deeper in debt than ever before, it’s become a bit more reasonable to ask whether or not the third quarter’s activity will be sufficiently extended to not only bring about even higher stock prices, but ratify those we see right now. Based on fundamentals, the answer is clearly “no.”

This is not to say that stocks’ technical strength of the last several months can’t lead to new highs—especially if gold can’t crack $400 and the U.S. dollar can get its feet back under it and hold above the level of 90 on the U.S. dollar Index. Increasingly, though, investors are having to deal with looking harder at Iraq, a possible broadening of a trade war between the U.S. and Europe, debt levels (public and private) and more.

The stock bulls also have to wonder why—if things are getting so much better for the economy—corporate insiders accelerated their selling spree last month. According to Thomson Financial’s Kevin Schwenger, insiders sold an astounding $59 worth of their shares in October for every $1 they bought, the most lopsided ratio in [over] a decade. This was the sixth month in a row where sales outdid purchases by at least a 20:1 ratio. Clearly, Corporate America’s television sets have not been tuned into CNBC.

Adding to the selling pressure are new outflows from stock mutual funds in the wake of scandals involving Putnam, Strong and others. Though much of this money has been plunked down elsewhere, last week ominously saw net outflows from stock funds of nearly $1 billion. This bears watching, especially as some fund managers and institutions must simultaneously be wondering whether—rather than being “pigs”—it’s time to stop tempting fate, and cash in some of 2003’s gains.

-- posted by Normxxx

» hairie31 - Vickers Sell/Buy Ratio: 6.36

Last Investors Intelligence: 73.74
(Bulls 57.3, Bears 20.4)

Last AAII: 78.61
(Bulls 53.3, Bears 14.5)

-- posted by hairie31

» hairie31 - Vickers Sell/Buy Ratio: 6.74

The past 3 months have seen a steady rise from 3.68 on August 18, 2003, to the current 6.74

Last Investors Intelligence: 73.74
Bulls 57.3
Bears 20.4

Last AAII: 60.52
Bulls: 53.2
Bears: 21.0

Happy Thanksgiving to all.
Hairie31

-- posted by hairie31