The Albert Edwards Exploration Diary, Day 423
by ilene - December 3rd, 2010 11:42 am
Joshua M Brown found the latest entry in the diary of a frustrated bear in search of negative data showing the economy is headed for a downturn in The Albert Edwards Exploration Diary, Day 423. – Ilene
Courtesy of Joshua M Brown, The Reformed Broker
2 Decembre Anno Domini 2010
This morning I awoke to a cable from the nearest village informing me that Cyber Monday shopping stateside broke all kinds of records. I’ve also been informed that PMIs from around the world are now in expansionary territory in unison. Even jobs data is getting a tiny bit better, week by week…
But still I forge ahead. I will scour the ends of the earth to find indicators that cast economic conditions in a negative light. I will climb the highest peaks and plumb the depths of the Seven Seas in search of Depressionary evidence – no matter how obscure. I will measure the second derivative change in Chinese eel sales on the wharves of Tianjin. I will document the savings rates of retired sailors in Marseilles. I will stop at nothing to make the numbers agree with my orneriness – this I swear to you, faithful client of Societe Generale.
Although my employer SocGen, the bankroller of my exploration, appears to be losing faith in my stubborn jeremiads, I must continue until I am proven correct. I must plow on in my search for negative data until I am vindicated, even if global markets triple and quadruple before the next down cycle.
One day, the recovery will falter. And on that day, I will be redeemed.
Yours in Perma-Bearishness,
Albert
Read Also:
Help Me! I’m Trapped in my Richard Russell Bunker! (TRB)
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INVESTORS HAVEN’T BEEN THIS BULLISH SINCE 2007 MARKET PEAK
by ilene - November 18th, 2010 3:50 pm
INVESTORS HAVEN’T BEEN THIS BULLISH SINCE 2007 MARKET PEAK
Courtesy of The Pragmatic Capitalist
Being bearish is officially out of style. Sentiment readings have reached well beyond excessively bullish levels. The most recent Investor’s Intelligence survey showed another sharp increase in bullishness at 56.2%. This 7.6% surge in bullishness is the largest one week jump since April 2010. At 56.2% this is also the highest reading since December 2007. The last time bullishness was even near these levels was April 28th, 2010 just days before the flash crash.
Last week’s AAII survey also showed extraordinarily high levels of bullishness at 57.6%. This reading is literally off the charts and almost 10 points higher than bullish sentiment at the April highs.
Bespoke Investments highlighted how unusual it is to see both of these sentiment polls at such high levels:
“At a current level of 113.8%, the combined reading is the highest since mid-October 2007, which was shortly after the S&P 500 reached its all-time closing high of 1,565.15. More recently, the last time combined bullish sentiment was above 100% was in April 2010.”
“Buy the dip” and “don’t fight the Fed” have become universal rally cries in recent weeks. It now appears as though no one believes the market can sustain a decline. Unfortunately, the market generally frustrates the most people most of the time. If that saying rings true today the market is at a particularly risky juncture.
*AAII survey will be updated tomorrow after its latest release.
Update: AAII sentiment fell 17.6% this week to 40%. According to Charles Rotblut this is the largest decline since January 2009. Like the current reading, that decline followed a multi month high in sentiment. The market ultimately plunged until sentiment hit its low of 19% in March 2009.
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Bullish….Bearish… or Neither
by Chart School - September 24th, 2010 4:50 pm
Bullish….Bearish… or Neither
Courtesy of Chris Kimble
Am I Bullish, Bearish or Neither?
Choice “C”…Niether!
I am of the opinion, being Bullish or Bearish are emotional states of mind. They are NOT STRATEGIES. I believe that we should invest in each asset on its own individual merits/patterns, not based upon some global macro prediction.
Did I suggest to buy the 500 index (see post) and become “BULLISH” on 8/29 because the economy was fine? NO! Bought the 500 Index due to these conditions…Bottom of channel support and a falling wedge and by the way, the fewest investors bullish since the March 2009 low. NOTHING MORE!
Did I harvest the S&P 500 position and become “BEARISH” yesterday (see post) , after an 8% gain in three weeks, because something is bad about the economy? NO! Harvested due to Fibonacci resistance at the top of a trading range. NOTHING MORE!
Did I buy Silver a month ago (see post) because something is wrong with the dollar or that inflation is going to go wild or….NOPE! I bought Silver on an upside breakout from a favorable pattern, an ascending triangle . NOTHING MORE!
Why own Emerging Markets or Brazil right now? Falling channel breakouts! (See Post) NOTHING MORE!
Why own High Yield mutual funds? A breakout of a flag pattern and above moving averages (see post) . NOTHING MORE!
Why BUY HOME BUILDERS XHB (see post) when so many people are BEARISH on this industry? Because of rising channel support plus a sizeable falling wedge after a 30% decline. NOTHING MORE! (Current gain of over 12%!)
Will we buy the 500 index and other global markets (see post) on an upside break of these long-term falling channels? YES!!!
My goal is to try to provide solutions, that will help investors “inflate portfolios, regardless of market direction by way of the Power of the Pattern!” I will leave the Bullish or Bearish elements of this business to people much smarter than myself.
Chris
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Bullish….Bearish… or Neither
by ilene - September 24th, 2010 1:29 pm
Chris, on being neitherish, i.e., how he views the markets. – Ilene
Bullish….Bearish… or Neither
Courtesy of Chris Kimble
Am I Bullish, Bearish or Neither?
Choice “C”…Niether!
I am of the opinion, being Bullish or Bearish are emotional states of mind. They are NOT STRATEGIES. I believe that we should invest in each asset on its own individual merits/patterns, not based upon some global macro prediction.
Did I suggest to buy the 500 index (see post) and become “BULLISH” on 8/29 because the economy was fine? NO! Bought the 500 Index due to these conditions…Bottom of channel support and a falling wedge and by the way, the fewest investors bullish since the March 2009 low. NOTHING MORE!
Did I harvest the S&P 500 position and become “BEARISH” yesterday (see post) , after an 8% gain in three weeks, because something is bad about the economy? NO! Harvested due to Fibonacci resistance at the top of a trading range. NOTHING MORE!
Did I buy Silver a month ago (see post) because something is wrong with the dollar or that inflation is going to go wild or….NOPE! I bought Silver on an upside breakout from a favorable pattern, an ascending triangle . NOTHING MORE!
Why own Emerging Markets or Brazil right now? Falling channel breakouts! (See Post) NOTHING MORE!
Why own High Yield mutual funds? A breakout of a flag pattern and above moving averages (see post) . NOTHING MORE!
Why BUY HOME BUILDERS XHB (see post) when so many people are BEARISH on this industry? Because of rising channel support plus a sizeable falling wedge after a 30% decline. NOTHING MORE! (Current gain of over 12%!)
Will we buy the 500 index and other global markets (see post) on an upside break of these long-term falling channels? YES!!!
My goal is to try to provide solutions, that will help investors “inflate portfolios, regardless of market direction by way of the Power of the Pattern!” I will leave the Bullish or Bearish elements of this business to people much smarter than myself.
Chris
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SENTIMENT TAKES A TURN FOR THE WORSE
by ilene - August 20th, 2010 3:19 am
SENTIMENT TAKES A TURN FOR THE WORSE
Courtesy of The Pragmatic Capitalist
Investor sentiment took a turn for the worse this week as most investors became increasingly bearish. The Investor’s Intelligence survey showed a steep 5% decline in bullishness while the AAII‘s survey showed an even larger decline of 9.7%. Although both surveys have declined dramatically in the last week neither is at extremes:
Charles Rotblut of AAII elaborated on the AAII results:
“Bullish sentiment, expectations that stock prices will rise over the next six months, fell 9.7 percentage points in the latest AAII Sentiment Survey. Bullish sentiment registered 30.1%, a six-week low. The historical average is 39%.
Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, fell 2.7 percentage points to 27.4%. The historical average is 31%.
Bearish sentiment, expectations that stock prices will fall over the next six months, rose 12.4 percentage points to 42.5%. This is a four-week high. The historical average is 30%.
Bearish sentiment has been firmly above its historical average for 14 out of the last 15 weeks. Sustained volatility in the market, continued economic uncertainty, a negative year-to-date return for the S&P
500 and low bond yields are all combining to fray individual investors’ nerves. Confidence is likely to remain fragile until investors have a sense that a bottom has been established for stock prices.”
Source: AAII & II
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High Frequency Swanning – The Crash Camp Takes Over
by ilene - May 20th, 2010 2:59 am
High Frequency Swanning – The Crash Camp Takes Over
Courtesy of Joshua M. Brown, The Reformed Broker
Here a Swan, there a Swan, everywhere a Black Swan…
Newsletter writers, hedge fund managers, journalists, bloggers, technicians, fundamental analysts, economists and strategists are joining the crash camp left and right. Not the bear camp…the crash camp.
I’ve been running around Manhattan all day taking care of business, meeting clients etc. After scanning today’s articles and blog posts, I can honestly say that I’ve never heard more chatter about an imminent market crash, all at once, in my life. It’s like the May 6th Flash Crash got everyone in the mood to talk cataclysm all of a sudden.
I’m not one of those guys who takes everything as a contrarian signal. I abhor knee-jerk contrarianism. Samuel Lord once said "Do not choose to be wrong for the sake of being different," and I think that’s kind of apropos here.
As avowed contrarian Dougie Kass likes to remind us, the crowd usually outsmarts the remnant when herd mentality takes over. So what is the herd hearing/ seeing?
* First of all, the macro guys are disturbed by the Euro Zone’s crisis and its ripple effect/ contagion risk. This isn’t new but it is more pervasive. And the possibility of a China collapse scares the hell out of almost everyone.
* The technicians and Dow Theorists are grossed out and have dusted off all the 1937 charts again. Specifically, they are looking at the highly distinct pattern of a big drop (May 6th) followed by a failed rally (euro bailout day’s 4% gap open) followed by another fast sell-off. Richard Russell’s latest missive, in which he tells us that we won’t recognize America by year’s end, will make you want to kill yourself.
* Equity analysts are all pointing to year-over-year comps which will start getting harder now. They may feel OK about the "E" but they’re shaky about the "P" – will the tax hikes and regulatory headwinds we now face really allow for a high-teens multiple on whatever the earnings turn out to be?
* Bond guys are freaking out about sovereign stuff, obviously. We’ve transferred corporate risks onto government balance sheets with bailouts, the Piper still awaits his payment in many cases.
*Eddie Elfenbein posted the results of a CNBC poll yesterday in which 40% of respondents predicted a 50% haircut for…
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CHART OF THE DAY: THE SMALL INVESTOR HATES THIS RALLY
by ilene - March 22nd, 2010 3:00 pm
CHART OF THE DAY: THE SMALL INVESTOR HATES THIS RALLY
Courtesy of The Pragmatic Capitalist
As the most hated rally in the history of rallies continues, the small
As Chart 1 illustrates, a record-low 6.2% of Americans buy into the recovery story and it looks as if this picture is already in the process of double-dipping. Rarely, if ever, has the perception gap between Wall Street and Main Street been so wide as it is today.
Source: Gluskin Sheff
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Bears
by ilene - March 21st, 2010 6:21 pm
Robert Prechter’s Thoughts on Valuation and Sentiment
Courtesy of Adam Sharp at Bearish News
Nice interview via CNBC. Mr. Elliot Wave talks about current extreme bullish sentiment and what it means, among other things.
*****
Don’t let the bears eat you while you’re sleeping! (I know, you’re not worried now.)
THE SLEEPING BEAR
Courtesy of Jason Louv at Dangerous Minds
This is perhaps the greatest camping accessory ever made. A sleeping bag that looks like a bear—perfect for scaring away bears that show up in the night… unless they fall in love and try to get all up in that shit….?
This is a greatest sleeping bag. You can wear it to sleep when you go camping. It is safe that no bear will attack your camp and eat you? Or you just want to wear it, and then scare your friend when he(she) wake up in the morning. (a good idea!) Well made and Cool! By artist Eiko Ishizawa.
(Thanks, @leashless!)
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SMALL SPECULATORS REMAIN BEARISH
by ilene - February 17th, 2010 11:11 pm
SMALL SPECULATORS REMAIN BEARISH
Courtesy of The Pragmatic Capitalist
The latest data from the CFTC shows continued bearishness from small speculators. Small speculators have been skeptical of the rally since its inception and remain so. More importantly, they have been wrong. This cruel market gave them a taste of victory over the last few weeks before snatching back half of the losses. Despite my cautious tone since S&P 1120, I fully disagree with the small speculators. You cannot be short equities in the face of the strong trends we continue to see. Earnings are likely to continue to be robust, we are approaching another stimulus based spring real estate season and stimulus in general remains accommodative. Small speculators as a contrarian indicator is likely to continue working.
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David’s Five Keys to Identifying a Fundamental Day Trade
by ilene - February 2nd, 2010 11:44 pm
In the Oxen Group section, David recommends a couple day-trades, usually in the morning, often a stock or ETF to buy, and a stock or ETF to sell short. David selects his trading candidates based on his “fundamental day-trade system,” and his analysis of the technical condition of the market. He attempts to choose stocks and ETFs that are likely to move 3-5% during the day, and also to open and close the positions at optimal times.
David selects trades by first examining five key sources of information to help him find "high probability trades." After selecting the trades, he applies several basic trading rules. He has an excellent track record, which is posted in the Oxen Group section and updated every few weeks. Previously, David wrote about the first two of his fundamental keys. Here, David writes about all five of the most important factors he looks at. – Ilene
The Five Keys to Identifying a Fundamental Day Trade
By David at Phil’s Stock World
Identifying the Fundamentals
Stocks move under the influence various factors that we can use to identify stocks that are likely to move 3-5% in a single day. Even the best technicals seldom give you 5% upward (or downward) movements intraday alone, but combined with fundamental factors, we can find stocks that are likely to make these large daily moves.
To begin to seek that perfect stock or ETF, we first need to look for something that can propel a stock or, in the case ETFs, the represented sector. This 3-5% movement is not from the previous day’s close, but between the market’s open and close. We want to identify a stock that can be bought sometime in the morning to give us that significant movement by the end of the day. The first type of information that is prone to easily move stocks is earnings.
For example, if one company announces positive earnings because it had a large profit from a lawsuit, this information does not tell us much about
…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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