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Wall St. Sentiment Weekly 1/08/12
Institutional Sentiment & Analysis
Published Sunday 1/08/2012
By Mark Steward Young
Short-Term Sentiment: Bullish.
Overall Intermediate-Term Sentiment: Mixed for the market.
Individual Investor Sentiment: Bearish for the market.
Small Speculator Sentiment: Neutral-to-Bullish for the market.
Small Hedge Fund/Manager Sentiment: Bullish for the Market.
Longer-term Trend:
Bull Market Condition.
Intermediate-term Trend:
Up. Confirmed.
Short-term (one-day) Signal:
Buy.
We are trading these signals and others intra-day for our Premium
subscribers--contact us for details ( http://www.wallstreetsentiment.com/contact.html).
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We have an Options Oscillator Buy and a strong one at that and we also
have a FL/FS Buy. We are now in a Bull Market condition. Momentum is
still up but overdone. We have a Senticator
Sell, but the Weekly Fearless Forecaster Pull has 64% Bears.
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Results of the Wall Street Sentiment Survey (formerly known
as the Fearless Forecaster Sentiment) taken after the close on 1/06/11:
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: 23%
Weekly BEARS: 45%
Our `Smart Money' Pollees were 0% Bullish and 25% Bearish.
Our Amateur Trader Pollees were 0% Bullish and 60% Bearish.
The Senticator: Bearish.
Last time, I said that my call for the week was for higher prices on
Tuesday and Wednesday and then weakness Thursday and Friday. The
S&P rallied nicely on Tuesday, held together on Wednesday, chopped
sideways on Thursday and declined on Friday. That's not really a bad
call at all. I think we can take a B+ for that call, as we got
direction and shape generally right. Remember, these predictions are
for demonstration purposes and are not a substitute for trading
discipline.
(No chart this week.)
The New Sentiment Trading Model sat flat due to divergent sentiment and
momentum. Past performance should not be considered a guarantee of
future returns.
Proprietary Surveys
This week, the WSS Surveyees are leaning heavily Bearish on good
participation. This implies perhaps a bit too much pessimism in a
market that hasn't topped. The "Smart Money" is a bit Bearish, and the
"Amateurs" are heavily Bearish. This implies more rally this week, BUT
the Senticator is Bearish, so we're likely to get some selling too.
Message Board Sentiment
The message board sentiment poll shows Bulls at 26% and Bears at
39%. This is Bearish, since these guys tend to be right, at least
short-term. The Actual Position Poll has 13% fully long and 22%
partially long. 4% are partially short and 35% are fully short. This is
well above my 20% threshold and that is mildly Bullish. We have a
strong FL/FS Buy. The 5-day Fully Long/Fully Short (FL/FS) ratio is
Neutral at 138%.
You can check out Traders-Talk.com for early updates of the sentiment
polls every day and overnight here: http://www.traders-talk.com/mb2/index.php?showforum=2.
Our T-4 Turn Indicator is at 22 which is well away from a
signal. Typically we want to see readings above 60 or higher. This
indicator doesn't catch every top and bottom, but it is a great "Heads
up!" indicator.
Options Sentiment
Daily P/C ratio: 0.96. Neutral. Near a Sell.
10-day P/C ratio: 0.93. Neutral. As low as we've seen in a long time.
Equity P/C ratio: 0.62. Neutral. Near a Sell.
OEX PC ratio (not a fade): 3.21. Sell.
OEX 10-day PC ratio: 2.06. Sell.
OEX $-weighted* P/C ratio: N/A.
NDX $-weighted* P/C ratio: N/A.
ISEE Sentiment Index: 93. Strong Buy.
10-Day ISEE Sentiment Index: 118. Neutral.
Options Oscillator: -43. Strong Buy.
Relative VIX: Neutral.
Daily VIX: Sell.
The short-term options are looking a little Bearish, especially the
OEX P/C and VIX, BUT, the Options Oscillator flashing a strong Buy.
Mixed bag. Market Harmonics' Options Buyers Sentiment Gauge (thank you,
Tony Carrion http://www.market-harmonics.com)
is on a Buy.
(If the chart is corrupted, use this link: http://www.market-harmonics.com/images/tech/sentiment/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
National Association of Active Investment Managers (NAAIM) Sentiment
Survey reported Thursday, that the Median market exposure
rose a tad from 45.00% to 47.50%. That's still constructive. The prior
IT Buy is technically in force until we get a Sell. The mean exposure
went to 43.14% from 43.56%, which is almost flat. The maximum short
exposure rose to 125%, which might bring some buying, and the maximum
long exposure rose a bit to 140% long. That's generally a little bit
Bearish for the market, but not much. We're in an up trend in a Bull
market. This data is not inconsistent with higher prices. For more on
this, see our white paper here, http://www.traders-talk.com/mb2/index.php?showtopic=116382
.
TSPTalk reported 47% Bulls and 39% Bears, vs. 45% Bulls and 40%
Bears the prior week. That's a couple more Bulls and a couple less
Bears. That's a Buy by their new measures but I think it's Neutral.
They are still using their Bull Market Filter and I agree.
AAII is showing 48.88% Bulls and 17.16% Bears. Last week, we had
40.60% Bulls and 30.83% Bears. This is a good deal more Bulls and a lot
less Bears. This is both IT and ST Bearish. Use care.
Investors Intelligence reported 49.50% Bulls and 30.50% Bears
vs. 50.50% Bulls and 29.50% Bears last week. That's a few less Bulls
and a few more Bears. We view that as neutral, but it's within spitting
distance of a Sell.
The Newsletter Advisors got a bit more Bullish at 34.40% (long)
vs. 28.60% (long). That's again not a problem for the market. The Naz
advisors stayed just as "Bullish" at 0% (long) vs. 0% (long) last week.
This isn't much help, generally. I still like the Naz with these
numbers.
Lazlo Birinyi's site, Tickersense reported 38.46% Bulls and
26.92% Bears vs. 45.83% Bulls and 20.83% Bears the prior week. That's a
less Bulls and more Bears. That's generally OK for the market. This is
our least predictive survey.
Conclusion
Last week, I said that I figured that there would be a flurry of
buying to make sure that the late-comers Bulls paid the highest
possible price, prior to a more serious bit of selling. The dead even
split in the WSS survey data implied a rally into some sort of top,
too. That may or may not be what we got. This week is VERY tricky. The
Senticator is flashing a Sell, and the WSS "Smart Money" Guys are
Bearish, but the "Amateurs" are also Beared up. The AAII data showed a
big Bullish shift which has to be a warning sign of some sort too. The
OEX P/C is Bearish as is the VIX. On the other hand, the FL/FS is
flashing a strong Buy and so is the Options Oscillator. I have to
conclude that while we are probably mapping out a complex top, dips
should be bought. It's likely to be a wild and tricky week of trading.
My call is for a decline on Monday (taking my cue from GLOBEX), higher
prices on Tuesday (if not out of a low on Monday) and into Wednesday
and then weakness Thursday and Friday.
We have switched to a more robust sentiment approach with a momentum
and trend overlay. Momentum is Positive, but overdone and the Sentiment
for this model is modestly Bullish. We will have to try a long. We will
Buy a 1/2 position in the SPY at 127.00 or better. We will sell this at
129.00.
We are looking both ways. Since we've been publishing our ST Sentiment
Signals, we've had 345 trades and 216 winners. If you'd like a trial,
feel free to contact us (service@wallstreetsentiment.com).
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Ideal ETF Portfolio (tracking portfolio):
25% QLD @ 84
25% SPY 119.51
50% Money Market.
Bought a 25% position in the SPY at 119.51. We will advise and may buy
more.
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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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Mark Young
Editor
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