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II data trend


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#1 dcengr

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Posted 24 January 2007 - 12:26 PM

I said a few days ago that I expected II data to increase bullishness because it and COT trader bull % seems to track very well. The COT traders, and I assume II traders, are a bit longer term, so the sentiment belongs in the longer term category. The danger zone is when prices decrease and bullishness increases or remains the same. If that trend continues, a bear market downtrend has started. It is OK to have decreasing bullishness with increasing prices or increasing bullishness with increasing prices. The only combo that is NOT good is increasing bullishness with decreasing prices. II Data Bull Bear Bull% Bull-Bear Ratio 09/19/06 47.4 33.7 58.45% 13.7 1.41 09/26/06 47.4 33.7 58.45% 13.7 1.41 10/03/06 49.5 33.3 59.78% 16.2 1.49 10/10/06 52.2 30.4 63.20% 21.8 1.72 10/18/06 52.2 30 63.50% 22.2 1.74 10/25/06 52.7 30.1 63.65% 22.6 1.75 11/01/06 53.7 28.4 65.41% 25.3 1.89 11/08/06 52.1 26 66.71% 26.1 2.00 11/15/06 56.4 22.3 71.66% 34.1 2.53 11/22/06 58.5 22.3 72.40% 36.2 2.62 11/28/06 57.5 22.3 72.06% 35.2 2.58 12/06/06 59.8 23.9 71.45% 35.9 2.50 12/13/06 59.6 21.3 73.67% 38.3 2.80 12/20/06 58.8 20.6 74.06% 38.2 2.85 12/27/06 56.5 19.6 74.24% 36.9 2.88 01/03/07 55.3 21.3 72.19% 34 2.60 01/10/07 55.4 20.7 72.80% 34.7 2.68 01/17/07 50.5 22.1 69.56% 28.4 2.29 01/24/07 52.7 20.9 71.60% 31.8 2.52
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#2 dcengr

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Posted 24 January 2007 - 01:04 PM

Btw, I find it more bearish when the bull % gets to an extreme, drops, then increases again. Why I interpret it as bearish is that the whip saw in the polls indicate emotions starting to take over trader mentality. The original bulls may have had a good reason for taking long positions off after hitting an extreme, but when price doesn't follow, they often ignore such logical thought, and rely more on emotions to go back long. This emotional stage is dangerous as if price starts to go down, the original logical side which had them reduce risk comes back in a hurry. Emotion is the fuel for volatility, and the more you get, the more volatile it gets. So in addition to people loading up on a down trend, the second most dangerous sign I would think the sentiment polls show is whip saw in polls of longer time frame traders. This is just an observation and theory on my part.
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