23 replies to this topic

[U.F.O.]

TM, you help make a valid point that encouraged me to try a little different type of poll yesterday. Follow this line of logic for a minute if you would.. If a trader is essentially flat or long the market but is voting bearish on these opinion polls, the appearance is given that this is a person short the market. I've done this a hundred times before here. I'll be long, with reservations, and think the market is gonna crap out over the next couple of days so I'll vote bearish. By doing that I'm giving an incorrect snapshot of how I've already voted with my wallet in the marketplace. When OEXCHAOS, Jason or others are trying to determine market direction based on investor sentiment, is it really more important to know what people think or what people have actually done?

Here's the rub.....the big guys.....the Specialists, Market Makers, etc. have the inside track because they get to actually see the order flow. When do you think these guys start a new move lower, for example? Not when buy-side pressure is screaming. They wait until buy order flow is diminishing (everyone's long) and start dropping bids. They don't trade their book based on what anyone thinks, they react based on what money does, or has done. If a sentiment guru were to track actual long/flat/short positions on this website over a reasonable timeframe, IMO correlations may be able to be drawn between LARGE percentage long positions here and market selloffs and LARGE percentage short positions here and market rallies. By only paying attention to real-time positions, one could have the next best thing to a glimpse at the Specialist's book. IMO, opinions actually cloud the issue, not help in determining when a market is ripe to buy or sell.

U.F.O.

[U.F.O.]

Thanks Hawkeye. I agree and only had one more thought to add to the poll to help determine the strength of conviction of the bets that had already been placed. What do you think of this format?

Stock market Position Poll

Are you currently net:

Long
Long (with reservations)
Flat
Short
Short (with reservations)

This way you could still derive a total long/short count while taking a look at the "with reservations" as some sort of sentiment gauge that wouldn't take away from the ability to still get accurate position counts.

U.F.O.

[flyers&divers]

I am certain Mark will consider these ideas. While we are on the subject of polls I would be interested in what I think is another important component of market dynamic, namely: On a scale of one to ten how has the market been reacting to news developemnts in the last day or two? (ten being the most positive)

[trinharder]

I agree with the comments posted here and with U.F.O.'s suggestion re: (with reservations). The only other category I can think to add would be Long but Hedged. I currently have only 7 short positions compared to 18 long stock positions, but 9 of those are hedged with covered calls. Also 7 long positions with calls. Of those 18, 4 are gold and silver stocks which are also covered which may be considered a bearish bet. So while my answer is I am "net" long I am bearish overall. In addition I am also hedged with BEARX fund.

[TradeMark]

All. Many good thoughts here re "reservations" , "hedged" etc. Yet, I think it ultimately leads to too many categories. For example, much of last year I was long, almost always had reservations, and was therefore hedged to the point of being effectively flat. Argh!! I knew I was in reality flat (just didn't believe the rally - had lots of reasons, remember the many discussions on the board, ...). To make long story short, if there were a long, flat, short poll, I would have voted flat. But if there were a long, long reservations, hedged and flat poll. I would probably be all of those things. Maybe we could try KISS approach for a while - long, flat, short - and see how it works. Thoughts others? TM

[U.F.O.]

Concur TM. Long - Flat - Short. Let the positions speak for themselves. Even the folks who are hedged have a net position one way or the other. What would be helpful also would be a way to chart this movement off an Excel spread sheet. I'd be will to give it a try if someone could help show me how. (Remember, I'm extremely ignorant re: computers.) U.F.O.

[Zentrader Alias]

Another thing this poll overlooks is position size. It is one thing to be a nervous long with one toe dipped in the water (ie. 10% long), versus a raving bull who has loaded the boat with leverage. Maybe one way to construct the poll would be to create a scale from 1 to 10, with 1 being short with max leverage and 10 being long with max leverage with 5 being totally flat (100% cash). This would give a good feel for how much fuel is left to drive the market higher or vice versa.

[TradeMark]

UFO, Like the simple: long, flat, short. Long (or short) could be anthing from a little net long to way out on the margin -- but still it's long. Maybe some future embellishment might be % long - like 50%, 100%, 200% long -- but lets walk first. Spreadsheet should be simple to make for this, but I do not have excel, otherwise I could make it make it and send it your way if you wanted. I only have Lotus. Mabye someone else can make it in Excel? Maybe Mark has an idea. He was talking abuot 9 - 12 months ago of making such a poll: Not what do you think? But what are you doing? Sort of a FF board Rydex ratio. TM