4 replies to this topic

[OEXCHAOS]

Sentiment. The options were screaming "Sell!" last night, but Fully Long Bulls vs. Fully Short Bears was saying, "Buy". I know that AAII is very Bullish, but I'm not above questioning it. One or two of our users here pointed out Market Watch's Poll and the TSP Talk polls too. Both are pretty Bulled up. Now Hulbert is starting to get up there (60% is a heads up) and II has bee in the "sell zone". I'm not saying that it's time to be Bearish. It's not, but I want folks to recognize that AAII could end up being a hook. It's not impossible to even manipulate that indicator. In fact, for a few hundred bucks anyone here could dramatically change that and anyone who uses that as a major input in their trading model might be caught looking the wrong way. It's imperative to look at all sentiment sectors and reality check the data you're looking at. Right now, it's clear that we have a constructive environment, but that could change pretty quickly and without much further advancement in prices. The sentiment is NOT a lock for much higher prices. Mark

[hiker]

Hi Mark...thanks. here is what S&P Equity Research issued today in their weekly "Market Insight" ...their version of stats on seasonality may interest you - Market Insight for May 8, 2007 SEASONAL SOFTNESS AHEAD? Sell in May then walk away? S&P says yes, with a caveat. The S&P 500 index just eclipsed the 1,500 mark for the first time since September 11, 2000. Market sages are now talking about overtaking the S&P 500's old high of 1527 in the next two months. At this rate, the S&P 500 could be up 17% for the full year. But in light of eroding fundamentals, many investors must be wondering if the recent market advance is sustainable. It's no wonder investors are considering the old Wall Street adage: "Sell in May then walk away." S&P Equity Strategy believes investors would be wise to heed the advice, but in a slightly altered fashion. There is truth in the old adage, in our opinion. Since 1945, the S&P 500 posted an average price gain of 7.1% during the November through April (N-A) period, versus a rise of only 1.6% from May through October (M-O), implying that greater profits could be made elsewhere. In addition, the performance during N-A outperformed M-O 69% of the time, as was the case in the last 12 months. We think there are several reasons for this pronounced seasonal strength and weakness. From the perspective of seasonal sluggishness, history shows that the S&P 500 has posted its weakest three-month average performance in the third quarter, as investors may be focusing more on their tans than their portfolios. Also, analysts may be more inclined to reduce their full-year earnings estimates late in the third quarter than they would have been in the first or second, thus helping make September the worst performing month of the year. What's more, October is historically a month in which the market establishes a bottom, so the S&P 500 enters November at a fairly low level compared with other months. This gives the N-A period the advantage of starting at a lower base. The above-average strength in the N-A stretch may be aided by large cash infusions into the market: IRA and 401(k) contributions, as well as the investment of bonuses and tax refunds. In addition, November is also around the time of year that analysts begin looking ahead by five quarters, rather than just focusing on the final one or two. N-A also has been fairly consistent in recording advances that have been above the long-term average. Since 1945, the S&P gained 4.5% or less (half of its long-term annual average of 9.0%) only 41% of the time — in other words, it exceeded a 4.5% advance 59% of the time. In M-O, however, the S&P gained less than 4.5% in 58% of the cases. Since the average M-O return is little different than holding cash, why incur the transaction cost and tax consequence? Here's one idea. Since 1990, which is as far back as we go with S&P 500 sector-level data, we find that while the cyclical sectors like financials, industrials, and materials (and consumer discretionary and information technology to a lesser extent) typically beat the market during N-A on both an average price appreciation basis and a frequency of outperformance standpoint, it was the consumer staples and health care groups — the defensive safe havens — that did the best. Had an investor owned the S&P 500 from N-A, then rotated into the S&P 500 consumer staples or health care sectors from M-O, and then rotated back into the S&P 500 from N-A, and so on, they would have seen their annual return rise from the 9.2% recorded for the S&P 500 to 12.7% for consumer staples and 13.0% for health care. (See cover chart.) In 2006, while the S&P 500 rose 5.1% from M-O, the S&P consumer staples index gained 8.8% and the S&P 500 health care index increased 7.8%. The old adage appears to have some merit. Whether it will work again is anyone's guess. We happen to think it will, however. In fact, S&P's Equity Strategy Group recommends overweighting the S&P 500 consumer staples, financials, and health care sectors.

[dasein]

Sentiment.

The options were screaming "Sell!" last night, but Fully Long Bulls vs. Fully Short Bears was saying, "Buy".


Mark

ISEE was 166, mentioned a week ago the feb selloff was a few days after 156; today ise was 124 close. Just a hunch, but looking at forex seems to be the clue to direction here...

seasonally, bonds tend togo up from here to december, but i think this year wil be different.

klh

[Rogerdodger]

And sentimentrader is UNMOVED... again! :yawn:

[OEXCHAOS]

Yup. We're about the same. If you see a sell off, it's a buy unless the bulls come out of the wood work to buy the dip...which could easily happen. That's got to be the most obvious play.... M