Wall St. Sentiment Weekly 1/12/14
Institutional Sentiment & Analysis
Published Sunday 1/12/2014
By Mark Steward Young
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Short-Term Sentiment: Mixed.
Overall Intermediate-Term Sentiment: Mixed-to-Bearish for the market.
Individual Investor Sentiment: Neutral for the market.
Small Speculator Sentiment: ST Bullish-to-mixed for the market and IT Bearish for the Market.
Small Hedge Fund/Manager Sentiment: ST Bearish for the market and IT Bearish for the Market.
Bull Market Condition.
Short-term (one-day) Signal:
A Buy, and a Sell.
We are trading these signals and others intra-day for our Premium subscribers--contact us for details ( call at the number below or reply to this email). The "Best Trend" Sell is confirmed.
We have an options Oscillator Sell. The FL/FS is still on a repeat Sell NAAIM shows no short Bears. 84% of AAII pollees are Bullish for 2014.
Results of the Wall Street Sentiment Survey (formerly known as the Fearless Forecaster Sentiment) taken after the close on 1/10/14:
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: 29%
Weekly BEARS: 59%
Our `Smart Money' Pollees were 67% Bullish and 33% Bearish.
Our Amateur Trader Pollees were 0% Bullish and 75% Bearish.
The Senticator is Neutral for the market.
The Weekly Sentiment Trading Model remains short a full SPY at 175.80 or better and remains short.
Past performance should not be considered a guarantee of future returns.
Last week, our call for the week was for a small rally on Monday that failed and a decline Tuesday and Wednesday, with a rally on Thursday and Friday. We were up, then down on Monday, as predicted, but then we rallied Tuesday thru Friday. Basically stronger than we thought, though the rally wasn't much. I think we can take a C- for that call.
This week, the WSS Surveyees are rather Bearish which implies some possible weakness. The "Smart Money" Traders are a bit Bullish and that implies strength, and the "Amateurs" are Beared-up and that implies possible strength. The Senticator is Neutral and no help. We may re-evaluate this indicator for continued inclusion in our work. All in all, think this data is somewhat Bullish for the market, but there may be a little tough trading this week, nonetheless. Note that this survey is from a virtually static pool of participants. The same traders and/types of traders have been participating for 15 years now with few additions or subtractions.
Message Board Sentiment:
The message board sentiment poll shows Bulls at 50% and Bears at 30%. This would be Bullish since this crew tends to be right, more often than not, but 50% is a fade. The Actual Position Poll shows 20% fully long and 35% partially long. 5% are partially short and 20% are fully short. This is right at our 20% threshold and thus modestly Bullish. We still on a FL/FS Sell. So many partially long Bulls implies that "the boyz" may take the market down to shake some weak handed Bulls out of their positions. I view this data as generally Bearish, for Monday.
If you'd like to check out these poll results real time, the polls are pinned at the top of this page: http://www.traders-talk.com/mb2/index.php?showforum=2
Daily P/C ratio: 0.76. Marginal sell.
10-day P/C ratio: 0.74. Sell. This is just off multi-year lows.
Equity P/C ratio: 0.53. Neutral.
OEX PC ratio (not a fade): 1.36. Neutral.
OEX 10-day PC ratio: 1.53. Neutral.
ISEE Sentiment Index: 106. Neutral.
10-Day ISEE Sentiment Index: 124. Maybe aging off an IT Sell.
Options Oscillator: -37. Strong Buy.
Relative VIX: Neutral.
Daily VIX: Sell.
CBOE:SPX: Negative. Unconfirmed by momentum.
The options are still looking a tiny bit Bullish for the market. VIX remains low, but ISEE fell hard. The Options Oscillator Buy is helpful, but the CBOE:SPX remains Bearish. The Market Harmonics' Options Buyers Sentiment Gauge (thank you, Tony Carrion http://www.market-harmonics.com) is Neutral.
(If the chart is corrupted, use this link: http://www.market-harmonics.com/images/tec...nt/obsglong.gif
Most options indicators are contrary; if most folks are buying calls, we want to fade them and go short and vice versa. The OEX nominal P/C is an exception, because the OEX traders tend to be right, unless they are paying up for options (which will show up in the $-weighted data). The ISEE Sentiment Index indicator is contrarian; traditionally, over 200 is too optimistic, under 100 is too pessimistic. *$-weighted P/C data courtesy of Fari Hamzei of www.hamzeianalytics.com. Readings over 2.0 are Bullish and near 0.5 are Bearish. OBSG provided by Tony Carrion of Market Harmonics.
General Public Polls
TSP Talk came in with 55% Bulls and 33% Bears. This is a bit negative for the market. They had 52% Bulls and 40% Bears last week.
Citigroup Panic/Euphoria Model remains Bearish.
National Association of Active Investment Managers (NAAIM) Sentiment Survey reported that the Median market exposure remained at 100.0%. This is still pretty over done. The IT Sell is still in force but is no longer that close to confirming. The mean exposure fell a bit to 92.27% from 95.03%. The minimum exposure moved to 0% short from 25% short. The Maximum exposure rose to 170% long vs 165% long last week. It looks like a Bears gave up on shorting, but a few folks got a bit less Bullish. This is still not very constructive for the market. For more on this, see our white paper here, http://www.traders-talk.com/mb2/index.php?showtopic=116382 .
AAII is showing 43.62% Bulls and 25.00% Bears. Last week, we had 43.10% Bulls and 29.30%. This is essentially unchanged. This is technically neutral. These same folks were asked their opinion for 2014 and 84% were Bulls.
Investors Intelligence reported 60.60.% Bulls and 15.20% Bears vs. 61.20.% Bulls and 15.20% Bears last week. That's a couple less Bulls and that's it. This is still a Sell. We're starting to get there with this data.
The Newsletter Advisors again got a bit less Bullish at 79.40% (Long) vs. 82.30% (Long). This is still showing way too much Bullishness. The Naz advisors stayed just as Bullish, at 93.80% long. Way too Bullish to be healthy for the market.
Lazlo Birinyi's site, Tickersense reported 40.00% Bulls and 44.00% Bears vs. 50.00% Bulls and 22.73% Bears the prior week. That's a big decrease in Bullishness and a large increase in Bearishness. This is Neutral or even Bullish for the market. This is our least predictive survey.
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Last week, I said that the CBOE P/C ratio was more Bulled up than it has been in years. ISEE had been very high and in IT Sell territory for days and days, but it has now inched out of the full-on Sell. Was that little bit of selling all we are to get? Maybe. Of course, with so many having bought calls to open, there is a chance that they will take the market down early in the week, so that they can bag the call buyers AND sell some expensive puts, prior to an end of week rally for monthly expiration. In any case, we are still on a Sell from the Fully Long/Fully Short, but we also have a Buy from the Options Oscillator. Despite the rally last week, the CBOE:SPX remains negative, though the momentum is positive. BTW, this is twice now that momentum has turned down, and gone into "acceleration mode" only to see the market immediately reverse. That's very frustrating. At this point, breadth remains positive and so does the daily trend, though we did go neutral last week for a day. One comes away from this thing feeling like none of our sell signals are going to deliver more than cursory selling. I'm sure that sooner or later they will, possibly due to such thinking, but it does cause one to doubt the utility of technical signals for the intermediate-term. Bigger picture, I'm pretty confident that Yellen is going to be tested and it's going to be a problem for the market. A big problem. When is the big question. Probably not for some time, still. Monday looks like we'll get some selling, and it might give the Bears something, but then again, it might not. My call for the week is for a sharp decline on Monday an modest bounce on Tuesday, down Wednesday into a low, with a rally on Thursday and Friday.
NEW Breadth Model:
Breadth is positive and confirmed. We exited at 25.45. We may be going short again soon.
100% in money market.
A word on our new Breadth Model: This trading model is based upon breadth momentum and has a seasonal and sentiment overlay to trim risk a bit. Signals are designed to capture much more of the "swing moves". We've watched these indicators for 20 years and we've got some confidence in their utility. We'll use the S&P ETF's for tracking purposes.
Weekly Trading Model: We have switched to a more robust sentiment approach with a momentum and trend overlay. Momentum turned back down and confirmed and Sentiment for this model is still Negative. The model Sold a full SPY at 175.80 or better and remains short. Watch for an alert.
For our Premium Service, day traders are looking both ways. If you'd like a trial, feel free to contact us (email@example.com).
Ideal ETF Portfolio (tracking portfolio):
100% Money Market
Sold 25% SPY from 119.51 at 177.25.
Sold 25% SPY from 144.15 at 177.25.
The trend turned up, as did breadth, but sentiment is very negative for the market. We may move back in quickly, though.
The above "Ideal ETF Portfolio" Model does not represent an actual managed account nor a managed account program that we offer. This is only for tracking purposes for the KTT and Premium newsletters. 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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