WallStreetSentiment.com
Published by Mark S. Young
Equity Guardian Group, LLC.
Investment Management & Research
800.769.6980
Short-Term Sentiment:
Negative.
Intermediate-Term Sentiment:
Mildly Negative. Early Top Building.
Intermediate-term Trend:
Positive.
Short-term (one-day) Signal:
Short on strength. (last signal "Cover shorts on weakness, or snug stops" asof 7/20).
Ideal Portfolio:
100% Money Market. Looking to Buy a pullback.
The message board sentiment poll now shows Bulls at 50% and Bears at 27%. Thisis still a bit excessive. Normally, we don't fade the pollees, but north of 50% changesthat. The Actual Position Poll now shows 57.50% at least partially long, and 30% at leastpartially short. There are just 7.5% fully short. This is still showing incredibleBullishness. More Bears, thankfully, but so long as the fully short Bears stay under 10%,it's a big warning sign. In fact, the large number of Bulls suggests dip buying whichimplies more selling. Short probably make some sense, with care. It's picking a top, andthat's both tough and dangerous.
The equity P/C ratio rose to 0.60 which is getting better, but shows no fear given theaction. The OEX PC ratio fell to 1.14, which is neutral. The $-weighted P/C fell back to0.49, which is Sell territory. The CBOE 10-day P/C ratio fell to 0.83 which is still awayfrom a Sell and implies that we probably have higher highs coming, longer term. Near-term,we're looking a bit Bearish. No pessimism on a decline.
LowRisk reported 53% (up from 52%) Bulls and Bears at 33% (up from 21%). That's showingmore Bullishness AND Bearishness. Still too many Bulls, but the rising Bears suggests thatwe'll make a good tradable low soon. Last week, AAII reported 41.18% (down from 57%) Bullsand 27.45% (up from 14.04%) Bears. This is a big improvement, but there's still plenty ofexcessive Bullishness. In our experience, these levels of Bullishness can last for muchlonger before we get a real top of longer-term importance. Near term, the Bearish shiftmay signify a willingness to take some profits. Be alert to that. Most declines afterexcessive Bullishness come a bit later from more constructive levels of sentiment.Investors Intelligence reported a rise to 52.7% (vs. 56.3%) Bulls, and a climb to to 23.1%(vs. 17.7%) Bears. This is better than it was, but it is still down there in Bearishterritory, but we need more time and more confirmation to get Bearish.
The Rydex Dynamic Bull funds saw $8MM of inflows, while the Dynamic Bear Funds had inflowsof $0.8MM. Surprising in a rotten market. Generally, the fund shifts were a bit mixed withall of the Bull funds taking in assets. No signs of real shorting, either. The RydexSpeculation Oscillator showed a modest Bullish shift on a clearly negative day. That's aSell. Given the wedge and the other data, I'd be looking for lower prices today. We'reprobably making that choppy top I alluded to on Saturday.
The Senticator is neutral. The message board sentiment is still very, very Bullish (whichis Bearish for the market). The evenly split Fearless Forecasters are a very reliable signof an impending turn. We may have made the top. The Rydex data and options suggest folksare buying the dip, which is almost assuredly premature. The rising wedge is generallyBearish, but we could possibly work along the top of it some more. Tops are always hard topick, but I'm confident that we have some lower prices coming and that they may come soonand fast.
The Mechanical model will sit flat. The Subjective model will go 1/2 short 123.50 orbetter.
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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
We want to buy a pullback, but this market probably needs to shake folks up a bit beforeit can really mount more of a rally. Let's sit on our hands (unless we get a nastydecline).
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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.
For more on using the ISA and the various sentiment poll data, click here:
www.WallStreetSentiment.com
Mark Young
Editor
1-800-769-6980
About Mark Steward Young
