2 replies to this topic

[OEXCHAOS]

Folks, I've said that excessive and persistent readings in the Fully Long/Fully Short Ratio represent signals. The current readings are significantly more Beared up than they've ever been. The last time they were close was last September with a reading around 45%. The market diddle-daddled around for two weeks or so, and then took off, not looking back. We are currently at 33%. Now, I'm looking for a pullback but I'm NOT going to be greedy, nor too patient.

[humble1]

the data is from here at TT ? also, any thoughts why sentiment missed the top by so much in this and other polls ? frankly, i don't see this is something to trade on.

Edited by humble1, 24 August 2007 - 11:18 AM.

[OEXCHAOS]

Humble, the data is from here.

I don't think that the sentiment did "Miss it". In fact, I pretty much said on the day before the top that the message board sentiment was consistent with a top. I'll post the newsletter momentarily. Regardless, sentiment is always tricky at tops. It's never really obvious.

See the newsletter below.



Institutional Sentiment & Analysis Weekly 7/15/07
Published Sunday 7/15/2007
By Mark Young of Equity Guardian Group

Short-Term Sentiment:
Neutral. Mixed.

Overall Intermediate-Term Sentiment: Neutral.

Individual Investor Sentiment: Neutral-to-Bearish.

Small Speculator Sentiment: Bearish.

Small Hedge Fund/Manager Sentiment: Neutral-to-Bullish.

Longer-term Trend:
Positive.

Intermediate-term Trend:
Positive.

Short-term (one-day) Signal:
None. We look both ways.

We are trading these signals 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 may add or dump. We're just giving this a little more room.

*******************************************************

Introduction
This week, we've got some serious Bullishness in some sectors, and some other strong hints of a short-term turn as well. Nothing like a major top, however, as yet.

Results of the Wall Street Sentiment Survey (formerly known as the Fearless Forecaster Sentiment) taken after the close on 7/13/07

Response was to this question: "At the end of next week will the S & P 500 close up (bull), down (bear), or unchanged/no opinion (neutral)?"

Weekly BULLS: 26%
Weekly BEARS: 32%

Our `Smart Money' Pollees are 0% Bullish and 33% Bearish.

Our Amateur Trader Pollees are 50% Bullish and 25% Bearish.

The Senticator is Bearish.

Last time, I said that thanks to "Weird Wolly Wednesday", there was a chance that we'd sell down right into Wednesday and then bounce, but my call was for a fake out on Monday, a bounce on Tuesday and then trade down into week's end. We got the first scenario, almost to a tee. I was only right about the sell off and the fake out on Monday. Basically I was too cute by half. I called it well and then fine tuned us into being wrong-footed since the market was down big on Tuesday and reversed strongly into Friday. I'm thinking that we can take only a C- for that call and that only because we did call for tradable weakness and because we gave one useful scenario.

The Mechanical Senticator Model and the Subjective Senticator Model both went short at 153.16. We missed covering up at 150.51 by ONE penny and closed this wonderful position for a loss at 154.90. Miserable. Note that the Senticator Models are based upon only one indicator and do not reflect our overall opinion. If the Senticator is Bearish or Bullish, the Mechanical model HAS to go short or long.

Proprietary Surveys
This week, the WSS Surveyees are learning Bearish, but not by a lot. The "Smart Money" guys are 33% Bearish and 66% Neutral, and those in our survey of "amateur" (more emotional) traders are more Bulled up. That's not a good sign for the market. The Senticator and the Amateurs suggest that we may have some more selling again this week. How long it lasts is anyone's guess.

Message Board Sentiment
The message board sentiment poll now shows Bulls at 29% and Bears at 49%, which is Bearish since these guys tend to be right more often than not. Participation was about normal. The Actual Position Poll has 23% fully long and 6% partially long. 17% are partially short and 31% are fully short. This is a lot of fully short Bears, but there are a goodly amount of fully long Bulls. One thing of note, however; this morning when I studied our data pool from 2004 I found something very interesting. When the Fully Short Bears were above 30% fully short and the Fully Long Bulls were above 20%, 72% of the time we were at a short-term top or at least a multi-day resting place for the market--most times we saw better than a 1% decline start immediately. I was actually quite surprised at this but it does suggest some selling this week.. The Weekly Fearless Forecaster Message Board poll is showing a few more Bears at 54% which is a little bit Bullish for the week, thus far. The trend is back up, so the Fully Long Bull/Fully Short Bear ratio will only need to be below 100% to be Bullish if the trend confirms.

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

Click here for chart: http://www.traders-t...6<br /> <br /> Our T-4 Turn Indicator went out at 51 which is well away from a signal. The last signal was on 6/22, probably a follow-on Sell. The prior signal was on 6/08/07 (this could be a back to back signal, possibly, for instance, a Buy on 6/07 and a Sell on 6/08, or we could simply be looking at a continuation of a Sell on 6/07). 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. We'll provide a chart every time we get a high reading.

Options Sentiment
Daily P/C ratio: 0.94. Neutral.
10-day P/C ratio: 0.90. Sell.
Equity P/C ratio: 0.50. Sell
OEX PC ratio: 0.95. Buy.
OEX 10-day PC ratio: 1.62. Borderline Sell.
OEX $-weighted* P/C ratio: 0.44. Sell.
QQQQ $-weighted* P/C ratio: 0.66. Neutral.
ISEE Sentiment Index: 181. Neutral but quite high.

The options data are looking odd again. I'm particularly worried about the longer term implications of the low 10-day CBOE PC and the high and rising OEX 10-day. The 10-day Equity P/C is also at the lowest level we've seen in many months and that's a big heads up-- last year's summer sell-off came from similar readings. ISEE is up there, too. Near term, the OEX nominal P/C is Bullish which makes a crystal clear call tough.

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
The Street.com again reported (as of Sunday morning) Bulls at 69% and a drop in Bears to 12%. This is clearly a Sell, again. TSPTalk, a large site devoted to Thrift Savings Plan management and personal finance flashing a Sell again with 54% Bulls and 31% Bears. That's the third Sell in a row by their own standards. By mine, that's a decent sell this go 'round. Last week, AAII reported 43.64% Bulls and 30.00% Bears vs. 43.84% Bulls and 32.88% Bears. This is a solid drop in Bearishness, but it's also nowhere near Sell territory. Investors Intelligence reported that Bulls were almost flat at 49.50% vs. 49.40%, and Bears rose to 21.30% vs. 18.00. The rise in Bears is modest, and while the number of Bulls isn't overdone, the ratio is. We're still here in Sell territory. LowRisk reported that their sentiment poll ended Sunday was 43% Bullish vs. 32% Bullish last week, and 43% Bearish vs. 54% Bearish the previous week. This is a dead even split which should support more selling. Mark Hulbert's HSNSI rose to 35%, I'm told and that's a big rise in Bullishness. That's at least a little bit short-term Bearish. Lazlo Birinyi reports that his Blogger Poll has 32% Bulls and 36% Bears. Nothing to get excited about, either way.

Rydex Sentiment
Our Rydex data shows that non-Dynamic Bull funds had $11MM (net) inflows on another rally. The non-Dynamic Bear funds saw $2MM of (net) outflows. It looks like amateurs are Bulling up again. The dip buying by the amateurs was REALLY well rewarded, surprisingly so. Dynamic Funds saw net Bull fund sells of $6MM, and Bear fund net sells of $72MM. It looks like the Dynamic players were pulling money out of their funds. The big Dynamic players are usually right, and when they were so wrong on Thursday, it's not surprising that they'd lighten up. The Russell Dynamic bull fund lost $1MM in assets. This fund is loosing current relevance so we'll not be reporting this going forward unless we see something anomalous. The RSO showed a $96MM Bullish asset shift on a decent rally. Bear fund sales accounts for most of that. I read this as neutral, though the ongoing bullishness of the amateurs may be a problem for the market.

Conclusion
Last week, I said that thanks to the Fearless Forecasters saying, "look for a turn", Bulled up Amateurs, TSP Talk, and TheStreet.com on Sells, we had a pretty good set up for some selling. I was worried, however aoubt "Weird Wolly Wednesday" which is usually a marker of a short-term low prior to a rally for op-ex. I should have been more worried about it. This week, we have a very different complexion to the market. The trend is back up. That's Bullish and that means we're fighting the trend and top picking. There's no arguing that. In fact, we got a weekly MACD Buy and cross over. Now, going over the past several years of weekly MACD cross-overs, 83% of the time the "signal" was a fade. That's almost as good as the daily MACD fade. Combine this with the Senticator, TheStreet.com at 68% Bulls, the equity P/C ratio, and the set-up from the Fearless Forecasters and I say, we get a pullback. After that, it's anyone's guess. We can get a pretty good pullback, but there's some reason to think that the real selling will show up somewhat later. For now, we have to look for lower prices, but we have to be nimble unless we start getting some support from the technicals. The odds strongly favor at least a day or two of selling, but without some serious volume support, we have to view it as a buy, especially with Op-Ex upon us. Let's just let them turn over one card at a time and play it by ear. My low-confidence call is for lower prices during the early part of the week and a bounce into Thursday, and flattish on Friday. Maybe a down-up-down on Monday, too. Play this market very loose. There's power on the upside as well as risk on the down side. I still believe that we'll be testing the lows again, sooner or later.

If the chart doesn't look correct, try this link: http://www.wallstree...f<br /> <br /> We have a ST Sell Sentiment signal. Since we've been publishing our ST Sentiment Signals, we've had 46 trades and 34 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 will go short at the open as will the Subjective Senticator Model. Remember, these models must trade in the direction of the Senticator or not at all.

****************
Ideal ETF Portfolio (tracking portfolio):

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

We're fully short. We may double up, or dump.

*******************************************************

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.

---------------------------------------------------------------------------------

If you'd like to receive the ISA Daily Trade Navigator, you'll need to make sure to order at this link (please indicate your subscriber status in the "notes").

http://www.wallstree...m<br /> <br /> If you are a KTT or Institutional subscriber, your ISA Navigator subscription is included.


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

http://www.wallstree...m<br /> <br /> Mark Young
Editor

See the link below for a historical chart of Fearless Forecaster sentiment.

ABOUT SENTIMENT AND ANALYSIS

The Fearless Forecaster Sentiment Poll is taken each Friday from a generally static pool of experienced technical analysts (both private and professional). The Fearless Forecaster Sentiment is not normally a good fade, though there are times when it can be.

The Fearless Forecaster sentiment data is useful on the short term; the Fearless Forecasters tend to be right. Typically they are right sooner rather than later, if there's a large plurality. On the flip side of the equation, if 90% or more are Bullish or Bearish, the odds of them being right over the very short term are huge, but the odds of a major turn (in the opposite direction) soon thereafter are also quite good.

We have also found that when the Fearless Forecasters are evenly split, look for a BIG move in either direction, but usually down.

Over the years, we have found a number of other tools to help in evaluating the Fearless Forecaster Sentiment. We publish this in our weekly "Institutional Sentiment & Analysis" (a part of our institutional research). These additional tools are our "Smart Money" poll, and our Senticator. Both are proprietary polls run by us.

We have found that the Senticator tends to be right by the end of the week (as much as 82.7% of the time), though it tends to be more accurate in a rising market than a falling one.

The "Smart Money" pollees are very useful when there is divergent opinion. It's generally NOT a good idea to fade the "Smart Money" unless "'EVERYONE'" (all sentiment measures) is in agreement. When in doubt about the meaning of the Fearless Forecaster Sentiment Poll, defer to the "Smart Money" poll. The "Smart Money" guys are folks with whom I've worked or whom I've watched for YEARS. They all have different approaches and they're all VERY good (not infallible, just good analysts/traders).

Subscriptions to Institutional Sentiment and Analysis are $99 per year. This also includes special sentiment updates and reports. Our polls are unique and insightful, and our analysis is some of the most accurate on the Street.

Order today by calling 1-800-769-6980 or order on-line at

http://www.wallstree...ment.com<br />