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#1 TTHQ Staff

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Posted 05 August 2004 - 10:04 AM



Institutional Sentiment & Analysis Weekly Report
for the week from 8/2/4 to 8/5/4


Response was to this question: "At the end of next week will the S & P 500 closeup (bull), down (bear), or unchanged/no opinion (neutral)?"

Weekly BULLS:  38%
Weekly BEARS:  31%

Our `Smart Money' Poll data shows three times as many as Bull readings as Neutral readingsand no Bear readings.

The Senticator is Bullish.


Last time, I said that I was going to look for a down Monday andthen a rally on Tuesday and into Wednesday and then back down Thursday and Friday. I alsonoted that if we were to trade down on increased pessimism, and then see evidence ofshorting on a bounce, give it some room as we might get more rally. We traded down onMonday and rallied Tuesday and into Wednesday. Actually, an aborted correction began onWednesday, as we thought it might, but pessimism quickly rose and the market bounced andheld into Friday. I should have seen the stronger close coming on Friday, as the last dayof the month buying would likely support. Still, I think I was pretty on target, so Ithink we can take a B+ on that one.

Last week, the Mechanical Senticator Trading model was Bullish, so the MechanicalSenticator Trading model went long at 109.10 and nailed down a nice profit. The Subjectivemodel tried to go long on weakness, and missed it, and then went SHORT 1/2 at 110.20, andtook a small loss I probably should have been more aggressive on the Buy side onWednesday. I'll not apologize for being Bearish and cautious in a down trend.

The Fearless Forecasters are modestly Bullish, and the Smart Money is very Bullish. Thatsuggests that we may have some strength next week, but it also seems like folks havequickly embraced the rally, which is worrisome. The Senticator is Bullish and that meansthat there's likely a rally in this market this week. I sense that the FF and Smart Moneymay be doing what most of us hot shots like to do, which is pick the bottom. The problemis, by some measures, we HAVE bottomed. Obviously, it's tricky.

Message board sentiment shows 41% Bulls, and 45% Bears. That's a goodly number of Bears,but nothing outlandish. Still, it's more Bears than Bulls on a decline, so it's a bitBullish. The Actual Position poll had 42% at least partially long and 29% short. This isshowing a lot of Bears and a goodly number who are confidently short. 21% are fully short,and the remaining 8% are nervously so. That means that those who are Bearish areconfident, but in my opinion there aren't enough of them for a solid low. On the otherhand, there are enough short Bears to drive the market a bit higher next week.

The equity P/C ratio fell to 0.53, which is showing no fear. The Dollar-weighted P/C ratiofell below 0.46 during the day on Friday, and then rose a bit to 0.53, which is looking abit risky. The VIX is low and right on its 21-day, so it can bounce, or fall further untilit gives a Sell. It never got near the levels that marked the last good low, and thatleaves me thinking that there's more decline to come.

Last week, AAII reported 34% Bulls vs. 36% Bulls the prior week and 36% Bears, which iswell up from 24% Bears last week. That is consistent with a change in trend, and if itkeeps up, we might look for a low soon. LowRisk reported 14% Bulls down from 24% lastweek, and 47% Bears, down from 52%. That's still pretty Bullish, and if we get moresupport from the other indicators, we can look for a low of some sort. InvestorsIntelligence reported 51.1% Bulls down a tad from 52.6% and 22.3% Bears, up a bit from20%. That's STILL looking amazingly bullish to me, but the slow downturn is consistentwith a change in trend. 

Rydex asset flows showed a large $34MM shift into the Dynamic Bull funds and an smaller$19MM shift out of the Dynamic Bear funds. The overall fund shifts were less robustlyBullish with actually some purchases of the Bear funds. The RSO showed a decent Bullishshift on the day, which is reasonable given the late come back. The RSO never got to thesame levels that triggered the June rally. I don't think that there was enough Bearishnessfor a solid low.






Scroll down to view the Historical Charts of the FearlessForecasters Sentiment as tracked by DecisionPoint.com, on a weekly basis.


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Thanks for your time,


Mark Young
President
Equity Guardian Group, LLC.
Investment Management & Research