ISA Daily Trade Navigator for 10/04/07
Thursday 9:05 am
By Mark Young of Equity Guardian Group
Short-Term Sentiment:
Neutral.
Overall Intermediate-Term Sentiment: Neutral to slightly Bearish.
Individual Investor Sentiment: Neutral-to-Bearish.
Small Speculator Sentiment: Bearish-to-Neutral.
Small Hedge Fund/Manager Sentiment: Neutral-to-short-term Bearish.
Longer-term Trend:
Positive.
Intermediate-term Trend:
Positive.
Short-term (one-day) Signal:
None, but we're looking both ways.
We are trading these signals and others (well) intra-day for our Premiumsubscribers--contact us for details.
Ideal ETF Portfolio (tracking portfolio):
50% long DIA at 133.41.
50% long DIA at 127.54.
We're long but we may lighten up.
Introduction
The market is up a couple. I'm thinking that they take it up and then bring it back.We've got a set up for some selling but also some pretty beared up readings in the messageboard poll. The volume was useless last night.
Message Board Sentiment
The message board sentiment poll shows Bulls at 21% and Bears at 50%, which would beBearish since these guys tend to be right more often than not, but so many Bears is afade. Participation was a below normal. The Actual Position Poll has 18% fully long and13% partially long. 18% are partially short and 24% are fully short. This is still abovemy 20% threshold, but not by a lot. Of course, we've also seen a drop in the fully longBulls. We do still have a set up for a pullback from the excessive reading we got theother day but we can see how fast the Bearishness rises. The Fully Long Bull/Fully ShortBear ratio is now neutral. Nothing to worry much about but it's no longer constructive.We're a long way from an outright sell, but a bit of care is warranted. Short-term couldbring a bounce-failure-sequence.
Check out
Our T-4 Turn Indicator went out at 43 which is well away from a signal. Typicallywe want to see readings above 80 or higher before we look for worthwhile turns. Thisindicator doesn't catch every top and bottom, but it is a great "Heads up!"indicator.
Options Sentiment
Daily P/C ratio: 0.82. Weak sell.
10-day P/C ratio: 0.93. Neutral. Getting down there.
Equity P/C ratio: 0.58. Neutral.
OEX PC ratio: 1.69. Neutral.
OEX 10-day PC ratio: 1.66. Neutral.
OEX $-weighted* P/C ratio: unavailable.
QQQQ $-weighted* P/C ratio: 0.93. Neutral.
ISEE Sentiment Index: 146. Neutral.
Relative VIX: Neutral.
For a discussion and additional charts of the Relative VIX, click here:
The options data look rather neutral again, but yesterday's readings still have me alittle nervous. Bigger picture, we want to keep an eye on the CBOE P/C, too. That's awarning sign.
The ISEE Sentiment Index indicator is contrarian; traditionally, over 200 is toooptimistic, under 100 is too pessimistic. *$-weighted P/C data courtesy of Fari Hamzei of
General Public Polls
Investors Intelligence reported that Bulls rose to 56.50% vs. 55.60%, and Bears fellto 25.00% vs. 25.60%. That is another Bullish shift. That's not great for the market. It'sa marginal Sell. Just remember they tend to be early, often months early. It's just oneindicator, too. LowRisk.com reports 36% Bullish vs. 25% last week, and 39%Bearish vs. 60% last week. That's very neutral and no help at all, except that the marketwas pretty solid without much bullishness. Mark Hulbert's HSNSI increased to34%, which is not excessive, but it's a lot higher than it was 2 weeks ago. On the Nasdaq,Bullish "exposure" has risen to 53% which is just a bit excessive--not far offwhere we topped at this summer. I'd say that this data supports a pullback. Advisors arestill pretty Bulled up on Gold. Lazlo Birinyi reports that his Blogger Poll has 50%Bulls and 28% Bears. That's still quite Bullish, despite the pullback on Friday. Now thatEOQ window dressing is done, we can probably see some more significant selling sometimethis week. TheStreet.com reported a drop in Bulls to 43% and a jump in Bears to29%. This isn't much help. A lot of late Bullish shifting. Last week, TSPTalk, alarger polling site devoted to savings plan management is flashing a Sell with 59% Bullsand 25% Bears. That's probably worth a short trade, sometime between now and next Friday.Last week's follow-on Buy was good as I thought it would be. AAII reported 49%Bulls and 34% Bears vs. 39% Bulls and 32% Bears. This is a big jump in Bulls and a smallerjump in Bears. The average investor is starting to believe the rally. This isn't such goodnews, but it's not a sign of major trouble yet, either.
Rydex Sentiment
Our Rydex data shows that non-Dynamic Bull funds had $3MM (net) inflows on apullback--Nova pulled in $5MM. The non-Dynamic Bear funds saw $2MM of (net) outflows. Itlooks like the amateurs are buying Nova, and selling everything else in small size. That'snot a signal but it is a warning sign. Dynamic Funds saw net Bull fund buys of $5MM, andBear fund net buys of $5MM. The Dynamic players appear to be a bit confused. They'rebetting both ways. The lack of a big bet either way leaves is with little to go on.
Conclusion
Last time, I said that I thought that yesterday could be a different story for theBears, thanks to the options set up. I was wrong. It was the same story. Dip and bounce.It was darned hard to trade. I'm still thinking that we pull back but the data is verymixed. Message board sentiment has a ton of Bears. Basically, momentum is holding thisthing up, and sentiment isn't telling us much with confidence. Just hints of weakness tocome. The Fed seems to be sopping some liquidity up, too, so that might be the impetus forour pullback. I think we will want to be careful but not overly Bearish. The weekly MACDcross will be our Sell, I'm pretty sure. Lighten up a bit on anything that doesn't lookgreat. Hedge with the TWM.
The Mechanical Senticator model went long at 152.60. The Subjective Senticator Model didas well. Sell at 155.60. Remember, these models must trade in the direction of theSenticator or not at all.
We do not have a ST Sentiment signal. I'm looking both ways. Since we've been publishingour ST Sentiment Signals, we've had 59 trades and 44 winners. We're much more active nowand I'm offering more set ups when I'm not going to be around. If you'd like a trial, feelfree to contact us.
Ideal ETF Portfolio (tracking portfolio):
50% long DIA at 133.41.
50% long DIA at 127.54.
We're long but we may lighten up.
Past performance is no guarantee of future returns. Allinformation 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 asan offer or solicitation to buy or sell any security. The publisher may have a long orshort position in the funds or securities discussed at any given time. We aren't youradvisor, unless you have a signed contract with us. Please review any trade that you dowith your trusted advisor FIRST.
For more on using the ISA and the various sentiment poll data, click here:
http://www.WallStreetSentiment.com
Mark Young
Editor
800-769-6980
859-393-3335
