22 replies to this topic

[Rogerdodger]

S/T I find jumps most telling.

Edited by Rogerdodger, 17 February 2007 - 07:29 PM.

[Chilidawgz]

too much money looking for a home

[Chilidawgz]

oopsay, my response would be political. My wish would be to rid ourselves of a "two" party system, throw most of the politicians out of office and hope that the populace would awaken...but that will not happen...put some gold away on a regular basis. It may save you some day.

[gti_99]

Hi, Rog, I assume you got those dots from Jason's Sentimentrader.com, correct? What is the number at the Bullish / Bearish deviding line? Thanks for sharing.

[esther231]

I'm dying to know too. Great charts, Roger.

Edited by esther231, 18 February 2007 - 10:22 AM.

[SemiBizz]

ALL YEAR LONG ? Gee, what's that 6 or 7 weeks? Dial your chart back to one year and see what your conclusion is...I seem to remember the sentiment readers dazed and confused for at least 6 weeks back in May and June... I don't use sentiment, because it is too indicative of empathy towards embedded positions rather than the opinions of fresh money going in or out of the market... As I have always contended, The VOLUME is the only vote that counts...

[OEXCHAOS]

Sentiment worked just fine in May. It was the sentiment readers who got fooled into ignoring II as well as the newly exploitable market segment, the small directional hedge funds. BUT, even without that, sentiment did exactly what it was supposed to. It told us that the May-June correction was nothing to be worried about and if anything we should be buying more. And after all, we're 120 S&P points higher now than we were in May, right? So, right now, what's sentiment saying? So far, nothing major to worry about, but we have ample Bullishness built up to fuel a correction, IF one will ever get started--otherwise we'll just drift/grind higher until something changes. Mark

[Rogerdodger]

Esther231 and gti_99: I watch several sentiment measures and of course Sentimentrader.com is one I like.

Semi:

The VOLUME is the only vote that counts.

I love your volume intrepretations and appreciate your posts on them.

I don't use sentiment, because it is too indicative of empathy towards embedded positions rather than the opinions of fresh money going in or out of the market...

Good observation. It may depend on the sentiment measure itself in the way the measurement of sentiment is taken.
I find that the sentiment measures taken once a week usually are simply a reflection of what took place during the past week.
However, the AAII record low below 30 pretty much nailed the bottom.



I used to know an old farmer who would do some welding for me.
I would explain what I wanted done but often my design idea was different from the way he would have designed it.
But he would simply say:
"There are lot's of ways to do lot's of things."

Some would say that volume itself is a measure of sentiment.
And I think you would agree that volume must be interpreted correctly to be an effective indicator.

I find that other "sentiment" measures are similar.
I also find, as stated above, that one day jumps often indicate that too many got on the wrong side of the trade in the short term.
It is especially useful when the market is fairly balanced or as Zoran Gayer liked to say, "bifurcated".
When a thrust comes, the intrepretation must change with the context.

We see a one day sentiment jump at the beginning of May's sell off.
Notice it also touched the VIX BB and reversed.
A week or so before that, I noted in my $VIX chart that the BB's were narrowing, the VIX had flatlined and that a move was coming as there was tension in the market. It did.
And like a guy trying to forecast high tide during a tsunami, things got a little extreme so you see some very bearish jumps as the downthrust is occurring and you can also see some bullish jumps which halted any rally along the way to the bottom.

Below is the May '06 chart. The sentiment indicated is for the following day, therefore I shifted the VIX one day and inverted it so that the connection would be more obvious.



http://stockcharts.com/c-sc/sc?s=$VIX&p=D&yr=1&mn=0&dy=0&i=p68884666374&a=27927380&r=3098.png

Edited by Rogerdodger, 18 February 2007 - 03:04 PM.

[OEXCHAOS]

Roger, one other thing folks might want to do is go back to the beginning of last may and look at our actual position poll. And by the way, Semi, I agree with Roger that one could argue that volume is a measure of sentiment. ChartGuru Doug always argued that price was sentiment. I don't look at either that way, but that doesn't mean that the theories aren't legitimate. Regardless, I DO look at volume now much more closely thanks to your work here. Mark

[Rogerdodger]

Hi Mark. Want to hear some politics? One thing that has sold me on some sentiment measures is that in reviewing historical changes in sentiment, I could very often predict price directionon the chart. If your position polls were put into a chart form and compared to the S&P or NYSE, I betcha you could see what I'm talking about.

Edited by Rogerdodger, 18 February 2007 - 05:09 PM.