Mighty, Mighty Beared up

This is the all-time historic chart of the FF Fully Long/Fully Short ratio, 5-day SMA. We've been more Beared up, but not a lot, and that was last summer, right before a big rally.

Even though I find the high number of bears here somewhat concerning, I don't think it reflects the broader sentiment, like last summer. Actually broader sentiment has improved significantly. AAII numbers, put/call and other measures are nothing like last summer of January/March.

Even though I find the high number of bears here somewhat concerning, I don't think it reflects the broader sentiment, like last summer. Actually broader sentiment has improved significantly. AAII numbers, put/call and other measures are nothing like last summer of January/March.

I concur with that.

The sentiment in TT is bearish, but overall general sentiment is quite bullish. And it won't take more than a 1-2 day scorch to wipe clean the bears here. But my guess is we go down soon regardless.

Don't understand the bears and their take on sentiment just as they don't seem to understand the bulls and their take on sentiment. I still think there is a bullish disconnect with the market and all the negative news in the mainstream press such as the WSJ about how oil and the credit crisis is going to send the economy over the edge. Even as a bull here I don't understand why the Dow isn't a 1000 points or lower, why the Transports were recently near all time highs, why there has been a rally in the weakest credits of the corporate bond market or why many retailing stocks have been so strong. How can all that be if the economy is about to fall into the abyss? I am assuming the market knows more than me hence my bullishness.

I don't think oil will be the main culprit. What is going to choke the economy for a couple of next years is DEBT. The start for this problem was the over-extended housing debt. This event is in the 3rd innings. The earliest housing can recover is spring 2009. Now the next event is brewing, that of over-extended credit card debt. It is growing faster than income and savings. This will squeeze the banks further with more individual bankruptcies. 22 state governments are already in serious budget deficits. The Federal government is writing checks worth $160 Billion with money they don't have..read additional debt. The two strongest influencing factors in US Economy are retail consumers and housing. And both look sick to me. Sooner or later this will affect the stock market as significantly as in 2002.

Don't understand the bears and their take on sentiment just as they don't seem to understand the bulls and their take on sentiment. I still think there is a bullish disconnect with the market and all the negative news in the mainstream press such as the WSJ about how oil and the credit crisis is going to send the economy over the edge. Even as a bull here I don't understand why the Dow isn't a 1000 points or lower, why the Transports were recently near all time highs, why there has been a rally in the weakest credits of the corporate bond market or why many retailing stocks have been so strong. How can all that be if the economy is about to fall into the abyss? I am assuming the market knows more than me hence my bullishness.

There are a few aspects to sentiment.

One is.. what % of the public is long or short.

Two is.. the ones that are long or short.. how long or short are they?

Three is.. how committed are they to their sentiment? Are they willing to hold a draw down or even add to a losing position?

Four is.. who are the ones that are long or short? Smart money or dumb money?

In general, #1 is pretty easy. #2 is a bit more difficult, but can be discerned. #3.. you can only tell with time (ie with change in price). #4 can be easily discerned, I tend to think.

If you want a clean read of sentiment, I would try a different board.. this place has been loaded with bears for several years. If Mark shows a moving average of the TT sentiment, he will see its been down trending for a while now.

Well folks the volume is low enough that all it takes is lighting a fart in a skillet... this IS options expiry week, only 2 out of 3 of the major indices has tested that dirty .50R... did you really think we're going to get out of here without a test? So, while sentiment may be bearish, the volume says it's all just hot air. These things have to be backed up by actual selling decisions, and that's not at all evident from the price/volume action. Read back through my threads, remember? I set a modest target of 1378 for the SPX to hit to prove that it could go further, because 1378 was a light volume target. We know there are reasons to test lower, but if we don't get there on light volume, stalling at 1379... and then we can bounce up and test the .50R at 1416, get pretty far over it and retrace back to this point where we are today... All the bearish sentiment is hogwash... Show me the volume... We either start a volume decline now, or all downside moves must be suspected as setups for options expiry. Targeting... SPX retest 1416 minimum. Nasdaq test 2506.

look to 6/ 04.. same kind of chart set up,,,I'm w/ simi...no vol.. the day traders have the ball..push it up or down..they do not care..as my self..in my charts we have over head supply..most charts are doing thier owen thing..in short a mess.as in the weekly charts.need time..then think of the banks and all the stock they have to get cash..TAKE TAKE TAKE...GREED IS GOOD..I want to be a small pig..as you should

Don't understand the bears and their take on sentiment just as they don't seem to understand the bulls and their take on sentiment. I still think there is a bullish disconnect with the market and all the negative news in the mainstream press such as the WSJ about how oil and the credit crisis is going to send the economy over the edge. Even as a bull here I don't understand why the Dow isn't a 1000 points or lower, why the Transports were recently near all time highs, why there has been a rally in the weakest credits of the corporate bond market or why many retailing stocks have been so strong. How can all that be if the economy is about to fall into the abyss? I am assuming the market knows more than me hence my bullishness.

There are a few aspects to sentiment.

One is.. what % of the public is long or short.

Two is.. the ones that are long or short.. how long or short are they?

Three is.. how committed are they to their sentiment? Are they willing to hold a draw down or even add to a losing position?

Four is.. who are the ones that are long or short? Smart money or dumb money?

In general, #1 is pretty easy. #2 is a bit more difficult, but can be discerned. #3.. you can only tell with time (ie with change in price). #4 can be easily discerned, I tend to think.

If you want a clean read of sentiment, I would try a different board.. this place has been loaded with bears for several years. If Mark shows a moving average of the TT sentiment, he will see its been down trending for a while now.

Actually, I'd say that there are more than a few aspects to sentiment.

First, "the public" is just one (or perhaps TWO) segments of what I believe is currently 3 exploitable sentiment segments. The smart money isn't exploitable, except to the degree that you can follow them.

The level of commitment is always interesting because I've found that (counter intuitively) lesser degree of commitment is a very good short-term fade. Longer term, I've found that a hard, persistent commitment is also a great fade for the investor or intermediate-term trader.

Now, as for a "clean" sentiment read, well, I think this site is plenty clean, most of the time. It's just representative of a different demographic than many other sites.

Still, we seem to agree with TSP Talk this week and Ticker-sense.

My approach is to look at 3 major sentiment sectors. If any one of them is seriously leaning too Bullish or too Bearish, there's a good chance that "someone" is going to exploit that increased probability of them making an "uneconomic trading decision". That's the edge. After that, it's really just a matter of figuring out how or when to require what type of confirmation.

Right now, we've got more Bullishness generally, but nobody is really leaning hard, in my view.

And the rest of my thoughts will be going to those who pay me for them first.