Institutional Sentiment & Analysis Weekend Report
for the week of June 6, 2005 - June 10, 2005
WallStreetSentiment.com
Published by Mark S. Young
Equity Guardian Group, LLC.
Investment Management & Research
800.769.6980
Short-Term Sentiment:
Positive.
Intermediate-Term Sentiment:
Negative.
Intermediate-term Trend:
Positive.
Short-term (one-day) Signal:
Neutral. (last signal Weak Buy 6-03).
Ideal Portfolio:
50% QQQQ.
50% SPY. Be alert for a position change. See comments below.
Results of the Wall Street Sentiment Survey(formerly known as the Fearless Forecaster Sentiment) taken after the close on 6/3/05.
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: 5%
Weekly BEARS: 67%
Our `Smart Money' Pollees are all Bearish but there were a lot of neutral-likecomments in their responses (I'm not quite sure what that means).
The Senticator is Bullish, but showing signs of acceptance.
Last time, I said that I thought that we would see some weakness on Tuesday and perhapsWednesday with a turn and rally back into Friday. We got a decline on Tuesday and then arally just into Friday, prior to a sell-off of some magnitude. That's not a perfect call,but it's pretty good. I think we can take a B for it.
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Last week, the Mechanical model went long at 120.08, and the Subjective model went long at119.50. All exited at the close on Friday at 120.15. That's a decent, if smaller, profitfor the Subjective model and basically a break even for the Mechanical model.
This week, the Fearless Forecasters are extremely Bearish with a goodly number of Neutralreadings. The "Smart Money" guys are very Bearishness too. The Senticator ismodestly Bullish, though it's showing signs of acceptance of the rally. The FearlessForecasters are typically right, but when we see so many on the same side of the boat,we'd better be alert for a quick reversal. That implies some selling on Monday, but thereought to be a rally quick on it's heels.
The message board sentiment poll has Bulls at 44% and Bears at 29%. That's pretty Bullishand would imply some buying, since these guys are typically right. The Actual PositionPoll shows 29% at least partially long, and a rousing 52% at least partially short with28.57% of the pollees fully short. That's TON of fully short Bears, and it strikes me as asign that folks are just a bit to eager to get short and pick a top. Normally, that is aBullish sign and I think we can view it as such as well.
The equity P/C ratio rose to 0.61 which is neutral and surprisingly so. TheDollar-weighted P/C rose to 0.69, which is in neutral territory. The sub 0.50 reading lastweek would be enough to generate a Sell IF it was confirmed by both trend and the Rydexdata--this could take some time. The OEX P/C ratio fell to 1.12, which is neutral.
Last week, LowRisk reported 47% Bulls and Bears at 29%. This is showing considerably moreBullishness which seems to be proper but also a warning sign. We had readings like this atthe December top. Of course, we also had readings like this for weeks going into it, too.AAII reported 49% Bulls and 19% Bears. This is another solid Bullish shift, and nowsolidly in the danger zone. This can persist for some time, however. InvestorsIntelligence reported a rise to 47.8% Bulls, and 25% Bears. The move back to Bullishnessis to be expected. Long-term, this data suggests future problems, but near term, it's justnot very telling.
The Rydex Dynamic Bull funds saw $16MM in inflows, while the Dynamic Bear Funds hadoutflows of $5 MM. More generally the asset flows were rather Bearish with only Bullishshifts in Velocity and Venture. The Rydex Speculation Oscillator showed a modest Bearishshift on a modest down day, which is consistent and doesn't tell us a ton. Longer-term, wehave seen some significant aggregate Bullish shifts, which is some cause for concern--butonly when the trend turns. So far, things are positive.
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The Senticator is flashing a weak Buy so we will belooking long. We are still seeing folks trying to pick the top, which implies that itisn't in yet, despite the fairly serious selling on Friday. There are enough excesses inthe market to trade down on Monday, but unless the Bulls come out of the wood-work, I'm ofthe opinion that they take the market back up again. Bigger picture, I'm thinking that wehave a correction ahead and then higher highs for this rally. Near term, however, it's abit tricky. My read on the sentiment suggests that with the Fearless Forecasters soBearish, the market is likely to sell down, but reverse. I'm going to call for a declineon Monday, and a low by or before Wednesday, and then a rally into Friday. I'm also quiteopen to chop on Monday into Wednesday. Longer-term, we have trouble brewing, but it can becostly to be too aggressive trying to call that.
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The Mechanical model will go long at the open on a limit of 120.20, and the Subjectivemodel will go long on a limit of 119.15, if we get there.
Not everyone likes a short-term trading model, and would like something that hangs onto bigger moves and reflects a less frantic trading pace. If you want to know how I would trade based upon the big picture and the sentiment, the following tracking portfolio is it. Ideal ETF Portfolio (tracking portfolio): |