2 replies to this topic

[OEXCHAOS]

ISA Daily Trade Navigator for 8/01/07
Wednesday at 8:51 am
By Mark Young of Equity Guardian Group

[/color]Short-Term Sentiment:
Bullish.

Overall Intermediate-Term Sentiment: Bullish.

Individual Investor Sentiment: Bullish.

Small Speculator Sentiment: Bullish.

Small Hedge Fund/Manager Sentiment: Neutral.

Longer-term Trend:
Positive.

Intermediate-term Trend:
Negative.

Short-term (one-day) Signal:
None, but I'm looking long when the hourly turns.

We are trading these signals and others (well) intra-day with KTT subscribers--contact us for details.

Ideal ETF Portfolio (tracking portfolio):

50% Short SPY at 151.
50% Short SPY at 152.

We're fully short. We are debating covering and possibly going long. Watch for an update.

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Introduction
This morning, the market appears to be ready to get killed, but it has mounted a come back too, prior to some weakness. The AHM debacle is a major worry. Except that it will trigger new liquidity which will be great for the market. The volume came in late and the OEX options are screaming "Buy!". The VIX agrees. Pick your spot to buy.

Message Board Sentiment
The message board sentiment poll shows Bulls at 22% and Bears at 57%, which is excessive and thus Bullish. Participation was above normal. The Actual Position Poll has 22% fully long and 22% partially long. 8% are partially short and 27% are fully short. This is well above my 20% threshold, and that's Bullish, near term. Lots of confident Bears, but a few more Bulls than I'd like. I suspect we'll shake a few of them loose today. Now that we are in a down trend, the Fully Long Bull/Fully Short Bear ratio needs to be below 60% to give a Buy. We're at 93% and rising.

Check out a href="."/" eudora="autourl">www.traders-talk.com for early updates of the sentiment polls every day.

http://www.traders-t...ost&id=5811.png

Our T-4 Turn Indicator went out at 59 which is away from a signal. This morning, we already have robust readings. Chances are, we'll get a signal today. I think it'll be a Buy. The last clear signal was this weekend, a Buy and prior to that was last Friday, a Sell. Typically we want to see readings above 80 or higher before we look for worthwhile turns. This indicator doesn't catch every top and bottom, but it is a great "Heads up!" indicator.

Options Sentiment
Daily P/C ratio: 1.27. Buy.
10-day P/C ratio: 1.18. Positive.
Equity P/C ratio: 0.63. Neutral.
OEX PC ratio: 0.78. Strong Buy.
OEX 10-day PC ratio: 1.42. Neutral. Near a BUY. Watch this...
OEX $-weighted* P/C ratio: 1.85. Neutral but near a Buy.
QQQQ $-weighted* P/C ratio: 2.52. Buy.
ISEE Sentiment Index: 102. Buy.
Relative VIX: Repeat Buy at 1.81.

http://www.traders-t...ost&id=5809.png

http://www.traders-t...showtopic=73525

The options data are looking Bullish, especially the OEX data, but there's not too much to work with. The Relative VIX Buy is Bullish. I'd say that the data suggests higher prices.

The ISEE Sentiment Index indicator is contrarian; traditionally, over 200 is too optimistic, under 100 is too pessimistic. *$-weighted P/C data courtesy of Fari Hamzei of www.hamzeianalytics.com . Readings over 2.0 are Bullish and near 0.5 are Bearish.

General Public Polls
LowRisk.com reported that their sentiment poll ended Sunday was 23% Bullish vs. 31% Bullish last week, and 67% Bearish vs. 40% Bearish the previous week. This is Bullish. Mark Hulbert's HSNSI fell to 24% and that's a solid drop in Bullishness. That's got to be a bit late, but it also shows how much pessimism got built up quickly--a drop from 48% long to 24% long in a week. I'm sure that opinion is already turning, but this still supports higher prices. Lazlo Birinyi reports that his Blogger Poll has 20% Bulls and 34% Bears. That makes some sense, but it's also a lot of Bears and not many Bulls. Not a Buy, but getting there, I think. The Street.com reported a big drop in Bulls to 35% and a jump in Bears to 39%. This is a decent shift, but usually rallies begin with a bit less Bullishness in this poll. TSPTalk, a large site devoted to Thrift Savings Plan management and personal finance is flashing a Buy with 45% Bulls and 41% Bears. That's a Buy by their own standards, but I'm not really comfy with that. Last week, AAII reported 44,21% Bulls and 36.84% Bears vs. 41.77% Bulls and 36.77% Bears. This is a solid increase in Bullishness in a sloppy market. While we are a long way from Sell territory, that's Bearish. Investors Intelligence reported that Bulls rose to 53.9% vs. 52.30%, and Bears fell back to 18.00% vs. 19.30. The shifts were fairly modest, but they showed more Bullishness as the market was curling over. That's even more Bearish than before.

Rydex Sentiment
Our Rydex data shows that non-Dynamic Bull funds had $1MM (net) outflows on a nasty reversal and sell off. The non-Dynamic Bear funds saw $5MM of (net) inflows. It looks like the amateurs weren't that worried. That's a bit Bearish. The Bears ought to come out tonight, however. Dynamic Funds saw net Bull fund buys of $1MM, and Bear fund net buys of $12MM. The Dynamic players were again sitting tight. That's not much help, but who can blame them? The RSO showed an $87MM Bearish asset shift on a down day. Mostly liquidations. This is no help at all.

Conclusion
Last time, we said that I was thinking that we would trade down Tuesday, but I backed off of that due to the volume and the OEX P/C. I was open to a test, but I advised being patient and waiting for the short-term trend to turn back down on at least an hourly basis. It did and the market collapsed, fulfilling my original projection, surprisingly. This morning, the world is in a panic over sub-prime and almost-prime lending fears. AHM collapsed and it's very like a run on a bank. This is the stuff of bottoms. We'll likely test any low we make, but with the relative VIX screaming Buy, and the rest of the sentiment supporting, including the OEX, again, you had better be looking long. I'm not saying that we won't be all over the map today, including a lot lower, but a good low is at hand and the next big move will be up. Pick your spot and start nibbling long.

We do not have a ST Sentiment signal. Yesterday, we nailed down a nice 13 point profit. Since we've been publishing our ST Sentiment Signals, we've had 49 trades and 37 winners. We're much more active now and I'm offering more set ups when I'm not going to be around. If you'd like a trial, feel free to contact us.

The Mechanical Senticator model went long at 145.93. The Subjective Senticator Model was already long at 146.45. Sold all at 148.45. The Subjective Senticator Model will buy a 1/2 position at the open. No stop. Remember, these models must trade in the direction of the Senticator or not at all.

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Ideal ETF Portfolio (tracking portfolio):

50% Short SPY at 151.
50% Short SPY at 152.

We're fully short. We are debating covering and possibly going long. Watch for an update.

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Past performance is no guarantee of future returns. All information included in this missive is derived from sources we believe to be reliable, but no guarantee can be made to that effect. None of the forgoing should be construed as an offer or solicitation to buy or sell any security. The publisher may have a long or short position in the funds or securities discussed at any given time. We aren't your advisor, unless you have a signed contract with us. Please review any trade that you do with your trusted advisor FIRST.

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For more on using the ISA and the various sentiment poll data, click here:

http://www.WallStree...m<br /> <br /> Mark Young
Editor
800-769-6980
859-393-3335

[hiker]

Mark, did you cover short and/or switch long with your SPY "tracking portfolio"...btw, does tracking mean the trade entries mentioned are not actual trades, but are tracking information only? today's low about 1.5 point off of 1437 .618 retrace...fib is clearly impt in trade decisions

Edited by hiker, 01 August 2007 - 03:26 PM.

[OEXCHAOS]

Mark,

did you cover short and/or switch long with your SPY "tracking portfolio"...btw, does tracking mean the trade entries mentioned are not actual trades, but are tracking information only?

today's low about 1.5 point off of 1437 .618 retrace...fib is clearly impt in trade decisions

Switched long late today. We'll probably add tomorrow, and then probably reverse soon after for the retest when we get a set up.

Tracking is for Timer Digest.

Managed money took shorts off a couple days ago.