9 replies to this topic

[OEXCHAOS]

from below, "...one caveat is that these folks tend to get right right right at turns. That's odd, and uncanny, but so it goes. "

http://www.traders-t...showtopic=70008

I'm thinking that the dip can be bought but we might want to show this one a little respect for a day.

Mark

[BearItch]

from below, "...one caveat is that these folks tend to get right right right at turns. That's odd, and uncanny, but so it goes. "

http://www.traders-t...showtopic=70008

I'm thinking that the dip can be bought but we might want to show this one a little respect for a day.

Mark

The FF were not bearish enough today. The poll I started early this morning polled the short bears. Here is a snapshot of the poll at about 11:00am, around the time the market took a dive:

What measure of decline do you expect today in the SPX?
Less than .5% [ 5 ] [50.00%]
Between .5% and 1% [ 4 ] [40.00%]
Between 1% and 2% [ 0 ] [0.00%]
Between 2% and 3% [ 0 ] [0.00%]
Between 3% and 4% [ 1 ] [10.00%]
Greater than 4%. [ 0 ] [0.00%]

Total Votes: 10


Assuming the poll was taken only by partially or fully short bears, it shows that though while they were "bearish", they were looking for a little down. The SPX fell 1.4% for the day. Nobody polled took that stance. Some 90% thought it would decline less than 1% for the day.

[Russ]

Sentiment does not always work, as it did not in early 2000. Look at the AAII latest poll, there were hardly any bulls and the oex put buyers were betting two to one in favor of the market going down. The main uptrend on the spx has been broken and the macd has turned negative, that's the most important poll there is.

[OEXCHAOS]

Russ,

Define "work"?

As far as I can see, it works just fine, for what it does.

In order to get a good correction, you need just one sector of the three to be Bulled up. Right now, that's a pretty borderline proposition, btw.

For a short-term decline, you'll often get a sell or two from the options sentiment. We had that, I'd say. Unambiguiously. The $-weighted P/C's too were flashing some sells over the past couple days. But, the big polls like AAII and II are irrelevant to that sort of thing. Our polls are pretty useful on the short-term, but at turns, as I've said, the majority crew tends to be right. But sentiment is NEVER a linear thing.

So, let's test Sentiment. From here, NO major top. At first look, this decline should find it's feet in a couple of days. Now, if we see aggressive dip buying on the decline, then we have to look for lower prices stil and maybe even an IT decline, but otherwise, we should be looking long as soon as the downward momentum dies.

And, of course, if sentiment sets up in a funny way, well then we'll adjust to it. It's a lot like price in that way.

Mark

Sentiment does not always work, as it did not in early 2000.

Look at the AAII latest poll, there were hardly any bulls and the oex put buyers were betting two to one in favor of the market going down.

The main uptrend on the spx has been broken and the macd has turned negative, that's the most important poll there is.

[Russ]

Mark,

'Work' as in being a contrarian indicator. The AAII poll was very bearish and they are right and if it is not important then why does Don Wolanchuk quote it frequently?

The Sentimentrader.com indicator was only mildly bullish and RD was saying we needed it to be very bullish.

I don't think the market is going to recover from this sell off until late mid June, there will likely be a bounce back up after next week though.

Russ

Russ,

Define "work"?

As far as I can see, it works just fine, for what it does.

In order to get a good correction, you need just one sector of the three to be Bulled up. Right now, that's a pretty borderline proposition, btw.

For a short-term decline, you'll often get a sell or two from the options sentiment. We had that, I'd say. Unambiguiously. The $-weighted P/C's too were flashing some sells over the past couple days. But, the big polls like AAII and II are irrelevant to that sort of thing. Our polls are pretty useful on the short-term, but at turns, as I've said, the majority crew tends to be right. But sentiment is NEVER a linear thing.

So, let's test Sentiment. From here, NO major top. At first look, this decline should find it's feet in a couple of days. Now, if we see aggressive dip buying on the decline, then we have to look for lower prices stil and maybe even an IT decline, but otherwise, we should be looking long as soon as the downward momentum dies.

And, of course, if sentiment sets up in a funny way, well then we'll adjust to it. It's a lot like price in that way.

Mark

Sentiment does not always work, as it did not in early 2000.

Look at the AAII latest poll, there were hardly any bulls and the oex put buyers were betting two to one in favor of the market going down.

The main uptrend on the spx has been broken and the macd has turned negative, that's the most important poll there is.

[redfoliage2]

Does it matter whose sentiment? Could the sentiment of average investors and the sentiment of skilled TAs have different meanings? Smart money vs dumb money? They may be agree with each other in a period of time and disagree in another.

Edited by redfoliage2, 10 May 2007 - 10:58 PM.

[OEXCHAOS]

Does it matter whose sentiment? Could the sentiment of average investors and the sentiment of skilled TAs have different meanings? Smart money vs dumb money? They may be agree with each other in a period of time and disagree in another.

I think "whose sentiment" does matter. That said, I'm not 100% confident in my interpretation of which means how much. I think that's the tricky part.

As for contrarian, well, some sentiment is more contrarian than others. Also it's imerative to note that "contrarian" has to be contextualized by relative timeframe. MOST importantly, you HAVE to understand that the contrarian nature is NOT linear. You can get AAII all beared up and the market will rally almost immediately, but not very much or not very long.

It's a far more nuanced thing than most folks realize, which is why folks start saying "sentiment doesn't work" right about at tops and bottoms. It is, in fact, why several years ago I moved away from what I was writing about and focused more and more on interpreting sentiment until I basically specialized in it and portfolio/risk management.

Mark

[Russ]

In order to get a good correction, you need just one sector of the three to be Bulled up. Right now, that's a pretty borderline proposition, btw.

Mark:

The three sectors being, Industrials, Transports and Utilities?

[OEXCHAOS]

In order to get a good correction, you need just one sector of the three to be Bulled up. Right now, that's a pretty borderline proposition, btw.

Mark:

The three sectors being, Industrials, Transports and Utilities?

No no! Sorry about that!

Three SENTIMENT sectors!

Individual Investor
Small Speculator
Small Hedge Fund

And that's just an approximation but its the best we can do. Basically, that limits the sentiment analysis to the three segments likely to be exploited, manipulated, or fooled (take your pick) when leaning too hard in any one direction. Whoever's left IS the market, basically.

Mark

[da_cheif]

yep.....never fade the market..........it allways tells the truth.......snort