www.WallStreetSentiment.com
Published by Mark S. Young
Equity Guardian Group, LLC.
Investment Management & Research
800.769.6980
Short-Term Sentiment:
Neutral/Positive.
Intermediate-Term Sentiment:
Mildly Negative.
Intermediate-term Trend:
Negative.
Short-term (one-day) Signal:
Buy. (last signal weak Sell as of 7/6)
Ideal Portfolio:
100% Money Market
Regarding the terror attacks this morning in London, ourhearts go out to our friends, colleagues and subscribers in the UK. Our position is thatthe markets are not in a particularly precarious state, and thus (thankfully) any plannedlong term damage to our financial markets will be thwarted. I personally believe that anyearly weakness may be bought, prudently.
The message board sentiment poll shows Bulls at 33% and Bears at 37% which isBearish--this poll is not a good fade. The Actual Position Poll shows 32% at leastpartially long, and 43% at least partially short. There are 14.29% fully short. I'm stilla bit concerned that we have so few fully short, but we're getting more partially shorttraders. The morning event probably renders these readings irrelevant, however. Tomorrow'swill be more relevant.
The equity P/C ratio rose to 0.52 which is better but near Sell territory. The OEX PCratio fell to 1.22. The $-weighted P/C rose to 0.60, which is neutral, but recent sub-0.50readings are enough to confirm that the current market could be in an intermediate-termdown trend. The CBOE 10-day P/C ratio (now at 0.87) implies that we may have higher highscoming and that the "true" top is not in.
LowRisk reported 24% (same as last week) Bulls and Bears at 52% (down from 59%). That'sstill a lot of Bears and a positive for the market. Investors Intelligence reported a fallto 53.9% (vs. 55.1%) Bulls, and 21.4% (vs. 19.1%) Bears. This modest Bearish shift isreasonable. This is consistent with a building Top, though such is probably weeks off.Last week, AAII reported 45.89% (down from 46.59%) Bulls and 29.45% (up from 18.18%)Bears. This remains at solidly Bullish levels, consistent with tops, but the Bears arequickly rising, and that's good news, short term. It is imperative to remember that highBullish readings in this poll can persist for some time. Again, this is only a yellowlight telling us to be alert to a possible top when trend and breadth both negative. Alsoremember that most of the really solid declines come from more benign readings after highlevels of Bullishness.
The Rydex Dynamic Bull funds saw $36MM of outflows, while the Dynamic Bear Funds hadoutflows of $1MM. Generally, the fund shifts were quite Bearish, though there weren't toomany Bear fund purchases. The Rydex Speculation Oscillator showed a solid Bearish shift ona nasty reversal day. That is the type of pessimism that helps create a low. We have wipedout half of the Bullish shifts of the entire rally since April.
The Senticator is neutral .The message board position poll still shows few real Bears. TheRydex data is beginning to show some real pessimism, however. I had expected the firstrally to fail and it has. I don't expect the weakness to last and in particular, I don'tbelieve that the powers that be will allow the cowardly terrorist attack to have thedesired effect of disrupting our financial markets. I expect a strong recovery off thelows today and probably Friday.
The Mechanical model and the Subjective model went long at 119.25 (Subjective for for1/2). We exited yesterday at the open at 120.39. For the Subjective model, I'm inclined tobuy 1/2 at the open with a 1 point stop.
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Not everyone likes a short-term trading model, and would like something that hangs ontobigger moves and reflects a less frenetic trading pace. If you want to know how I wouldtrade based upon the big picture and the sentiment, the following tracking portfolio isit.
Ideal ETF Portfolio (tracking portfolio):
100% Money Market
Sold 50% QQQQ from 35.31 at 37.23.
Sold 50% SPY from 116.65 at 120.18.
Here's a scary thought: we may end up going right back into these positions if we turnthings up here. The weekly MACD is quite close to turning back up and the 21-day hasalready been breached for a day.
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Past performance is no guarantee of future returns. All information included in thismissive is derived from sources we believe to be reliable, but no guarantee can be made tothat effect. None of the forgoing should be construed as an offer or solicitation to buyor sell any security. The publisher may have a long or short position in the funds orsecurities discussed at any given time. We aren't your advisor, unless you have a signedcontract with us. Please review any trade that you do with your trusted advisor FIRST.
Note that we are also publishing on our private area on Traders-Talk.com, for those whowant on-line access to our charts and research.
For more on using the ISA and the various sentiment poll data, click here:
www.WallStreetSentiment.com
Mark Young
Editor
1-800-769-6980
