Wall St. Sentiment Weekly 3/20/11 Institutional Sentiment & Analysis
Published Sunday 3/20/2011
By Mark Steward Young
Short-Term Sentiment: Mixed.
Overall Intermediate-Term Sentiment: Mixed for the market.
Individual Investor Sentiment: Mixed-to-Bullish for the market.
Small Speculator Sentiment: Bullish for the market.
Small Hedge Fund/Manager Sentiment: Mixed for the Market.
Longer-term Trend: Bull Market Condition.
Intermediate-term Trend: Negative. Confirmed.
Short-term (one-day) Signal:Sell and Buy. We're looking both ways but mostly long.
We are trading these signals and others intra-day for our Premium subscribers--contact us for details ( http://www.wallstree...om/contact.html).
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Ideal ETF Portfolio (tracking portfolio):25% QLD 34.30
25% QID 13.18
50% Money Market.
Bought an amount of QID equal to the value of the QLD. This effectively takes us flat. We are looking to get back long.
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ISEE is flashing a ST Buy on the heels of a ST Sell. NAAIM is flashing a ST Buy. Those are gold. The FL/FS has a lot of Bulls and is flashing a 2X Sell.
********************************************************Results of the Wall Street Sentiment Survey (formerly known as the Fearless Forecaster Sentiment) taken after the close on 3/18/11
Response was to this question: "At the end of next week will the S & P 500 close up (bull), down (bear), or unchanged/no opinion (neutral)?"
Weekly BULLS: 29%
Weekly BEARS: 41%
Our `Smart Money' Pollees were 50% Bullish and 50% Bearish.
Our Amateur Trader Pollees were 25% Bullish and 25% Bearish.
The Senticator: Neutral.
Last time, our prediction was for down early on Monday and then rally it into Tuesday but then try a test on Wednesday and then rally it Thursday and Friday options expiration.. Monday was Down and Tuesday was too with an attempt at a comeback. Wednesday was ugly and we rallied into Friday. We were off a bit early in the week, but otherwise we did OK with that call. I think we can to take a B- for that call. Remember, these predictions are for demonstration purposes and are not a substitute for trading discipline.
The new Sentiment Model sat flat.
Proprietary SurveysThis week, the WSS Surveyees are a bit Bullish and the "Smart Money" guys are too. The "Amateurs" are as Bearish as they are Bullish Beared up. The Senticator is Bullish. Participation in the surveys was below average. I fear there are too few Bears and that this week may be ugly, despite my feeling that we'll resolve higher.
Message Board SentimentThe message board sentiment poll shows Bulls at 42% and Bears at 32%. This is Bearish since even splits tend to presage short-term weakness. Participation was normal. The Actual Position Poll shows 42% fully long and 13% partially long. 8% are partially short and 14% are fully short. This is below my 20% threshold and that is mildly Bearish. We have another FL/FS 2X Sell but there's some strength to fight near term. I'd love to see a test.. The 5-day Fully Long/Fully Short (FL/FS) ratio is neutral at 159%.
You can check out Traders-Talk.com for early updates of the sentiment polls every day and overnight here: http://www.traders-t...php?showforum=2.
Our T-4 Turn Indicator is at 42 which is away from a signal. The last two signals look like a Buy and a Repeat Buy. Typically we want to see readings above 70 or higher (now that we've made changes to the posting guidelines). This indicator doesn't catch every top and bottom, but it is a great "Heads up!" indicator.
Options SentimentDaily P/C ratio: 1.02. Weak Buy.
10-day P/C ratio: 1.01. Neutral.
Equity P/C ratio: 0.70. Weak Buy.
OEX PC ratio (not a fade): 1.44. Neutral.
OEX 10-day PC ratio: 1.66. Sell.
OEX $-weighted* P/C ratio: 1.08. Neutral.
NDX $-weighted* P/C ratio: 2.41. Buy.
QID (Ultra Short QQQQ) P/C ratio: N/A.
SDS (Ultra Short SPX) P/C ratio: N/A.
ISEE Sentiment Index: 88 vs. 133. Buy. ST Buy on the heels of a ST Sell.
10-Day ISEE Sentiment Index: 101. Neutral.
Relative VIX: Neutral.
Daily VIX: Neutral.
The P/C data are generally supportive of higher prices, with the caveat that Op-Ex makes it all less reliable. The VIX is near a Sell however. ISEE was on a Sell on Friday and Now we have Buy. Maybe down a bit tomorrow and then up. Market Harmonics' Options Buyers Sentiment Gauge (thank you, Tony Carrion http://www.market-harmonics.com) is now Neutral.
Most options indicators are contrary; if most folks are buying calls, we want to fade them and go short and vice versa. The OEX nominal P/C is an exception, because the OEX traders tend to be right, unless they are paying up for options (which will show up in the $-weighted data). The ISEE Sentiment Index indicator is contrarian; traditionally, over 200 is too optimistic, under 100 is too pessimistic. *$-weighted P/C data courtesy of Fari Hamzei of www.hamzeianalytics.com . Readings over 2.0 are Bullish and near 0.5 are Bearish. OBSG provided by Tony Carrion of Market Harmonics.
General Public Polls
National Association of Active Investment Managers (NAAIM) Sentiment Survey reported that the Median market exposure fell to 50.00% vs 77.50% last week. We are coming off an IT Sell trigger. The big drop is a ST Buy. Those have been gold. The mean exposure went from 75.34% to 41.00%, a Big drop. That's Bullish too. The maximum short exposure rose to 200% short and the maximum long exposure remained at 165%. I view this data as at least modestly Bullish and rather Bullish short-term.
TSPTalk reported 39% Bulls and 52% Bears, vs. 33% Bulls and 56% Bears last week. That's a Buy by their new measures, and that's a Buy by mine. They are using their Bull Market Filter and we are in agreement on that.
AAII is showing 28.49% Bulls and 40.12% Bears. Last week, we had 35.98% Bulls and 32.32%. This is a lot less Bulls and a lot more Bears. That's a good shift. I'm calling this Neutral, near a Buy.
Investors Intelligence reported 52.20% Bulls and 22.30% Bears vs. 52.20% Bulls and 21.10% Bears last week. That's just as many Bulls and a few more Bears. We remain in solidly in Sell territory, even after all this weakness. Bearish for the market.
The Newsletter Advisors were a little less Bullish again at 43.0% net long vs. 49.1% net long last week. Looking a bit better for the market. The Naz advisors are much less Bullish at 20.00% net long vs. 46.70% net long last week. The data are possibly Bullish for the market, especially the Naz.
Lazlo Birinyi's site, Tickersense, reported 50% Bulls and 33% Bears vs. 50% Bulls and 25% Bears the prior week. That's a whole lot of Bulls, but more Bears. That's Bearish, with the caveat that this measure has been our least predictive over the past year or so.
ConclusionLast week, I said that we had the bare minimum required for a completed A-B-C correction adn that if we could get a bit more Bearishness, we'd be buyers. Well, we finally got some more Bears at NAAIM which actually flashed a ST Buy. There was also a lot of hedging going on. Now, I'm hopeful we can get some selling, based upon some of the other sentiment that I'm seeing but it's by no means a lock. The market is awash with liquidity and the excuses for selling off are diminishing by the day. That said, I fear that we're going to get some bad news from Libya. That will probably pull this market back. If my favorite bottom-spotting stochastic is right, that's a buy. Basically pick your spot and start accumulating. We'll start buying shortly too and will advise of any model change by special alert. My call for the week is for a rally early on Monday and a slight fade late. Down a bit on Tuesday into Wednesday and then up into the end of the week. .
We are on twitter and we offer comments and trade updates throughout the day as we have time or as we see sentiment of interest. You can follow us at http://twitter.com/WallStSentiment .
We have switched to a more robust sentiment approach with a momentum and trend overlay. Momentum is positive. Sentiment for this model is Bullish. The trend is down and confirmed. We are long the SPY at 129.92. Hold.
We are looking both ways. Since we've been publishing our ST Sentiment Signals, we've had 231 trades and 152 winners. If you'd like a trial, feel free to contact us ( http://www.wallstree...om/contact.html).
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Ideal ETF Portfolio (tracking portfolio):25% QLD 34.30
25% QID 13.18
50% Money Market.
Bought an amount of QID equal to the value of the QLD. This effectively takes us flat. We are looking to get back long.*******************************************************
Past performance is no guarantee of future returns. All information included in this missive is derived from sources we believe to be reliable, but no guarantee can be made to that effect. None of the forgoing should be construed as an offer or solicitation to buy or sell any security. The publisher may have a long or short position in the funds or securities discussed at any given time. We aren't your advisor, unless you have a signed contract with us. Please review any trade that you do with your trusted advisor FIRST.
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http://www.wallstree...nt.com/d/i.htmlMark Young
Editor
ABOUT SENTIMENT AND ANALYSIS
The Wall Street Sentiment Survey is taken each Friday from a generally static pool of experienced technical analysts (both private and professional). The Wall Street Sentiment Surveyees are not normally a good fade, though there are times when they can be.
The Wall Street Sentiment Survey data are useful on the short term; they tend to be right. Typically they are right sooner rather than later, if there's a large plurality. On the flip side of the equation, if 90% or more are Bullish or Bearish, the odds of them being right over the very short term are huge, but the odds of a major turn (in the opposite direction) soon thereafter are also quite good.
We have also found that when the Wall Street Sentiment Surveyees are evenly split, look for a BIG move in either direction, but usually down.
Over the years, we have found a number of other tools to help in evaluating the Wall Street Sentiment Survey. We publish this in our Wall St. Sentiment Weekly (a part of our institutional research). These additional tools are our "Smart Money" poll, Amateur Trader survey, and our Senticator. All are proprietary surveys conducted by us.
We have found that the Senticator tends to be right by the end of the week (as much as 82.7% of the time), though it tends to be more accurate in a rising market than a falling one.
The "Smart Money" pollees are very useful when there is divergent opinion. It's generally NOT a good idea to fade the "Smart Money" unless "'EVERYONE'" (all sentiment measures) is in agreement. When in doubt about the meaning of the Wall Street Sentiment Survey, defer to the "Smart Money" poll or fade the "Amateur Survey". The "Smart Money" guys are folks with whom I've worked or whom I've watched for YEARS. They all have different approaches and they're all VERY good (not infallible, just good analysts/traders).
The Amateur Surveyees are your classic more emotional traders who tend to be wrong when they are heavily leaning in any one direction--which is often at a turning point.
In addition to these surveys, we chronicle multiple other polls and surveys including those conducted by our sister firm, Traders-Talk.com. We also review options data and fund shifts at Rydex. Additionally, we are also the sole publishers of the T-4 indicator created by Traders-talk--which is a fantastic turn indicator.
Subscriptions to Institutional Sentiment and Analysis are $99 per year. This also includes special sentiment updates and reports. Our polls are unique and insightful, and our analysis is some of the most accurate on the Street.
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