Posts Tagged ‘bullishness’

AAII: BULLISH SENTIMENT HITS 6 YEAR HIGH

Courtesy of The Pragmatic Capitalist

This morning’s AAII sentiment survey is consistent with just about every other sentiment reading of late – investors are wildly confident that stocks will be higher in the coming 6 months.  The optimism is almost near universal. The following chart tells the story of this bi-polar market.  On August 26th, just days before the market bottom, the bullish sentiment hit just 20.7% – no one thought stocks were set to rise.  Now, after a 20% rise in equities the consensus is uniformly positive.

Charles Rotblut of AAII elaborated on this morning’s results:

“Bullish sentiment, expectations that stock prices will rise over the next six months, rose 13.1 percentage points to 63.3% in the latest AAII Sentiment Survey. This is the highest level of optimism since November 18, 2004. This is also the 16th consecutive week that bullish sentiment has been above its historical average of 31%, the longest such streak since 2004.

Neutral sentiment, expectations that stock prices will remain essentially flat, declined 2.3 percentage points to 20.3%. This is a six-week low for neutral sentiment and the 20th consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 10.7 percentage points to 16.4%. This is the lowest level of pessimism since July 14, 2005. It is also the 11th time in the past 12 weeks that bearish sentiment has been below its historical average 30%.

The spread between bullish and bearish sentiment is currently at +46.9 points. This is the most positive bull-bear spread since April 15, 2004, when it reached +50.0 points. A wider differential was recorded on March 5, 2009, when the bull-bear spread fell to -51.4 points.

Bullish sentiment is more than two standard deviations from its historical mean, making it a statistical outlier. In simpler terms, bullish sentiment is running red hot. In fact, the current reading is the 18th highest since the survey started in 1987. Higher readings were recorded in 1987, 2000, 2001, 2003 and 2004. Such high levels of optimism have been correlated with a decline in the S&P 500 over the proceeding 24 weeks, though the magnitude of the declines have varied.  A spreadsheet showing all of the survey’s historical data is attached.”

Source: AAII 


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HAVE WE SEEN CAPITULATION?

HAVE WE SEEN CAPITULATION?

Courtesy of The Pragmatic Capitalist

Napoleon I receiving the Capitulation of Ulm. Battle of Ulm, 16-19 October 1805. The outcome was a resounding French victory the capture of the entire Austrian army.

We’re not even close according to David Rosenberg:

“Short interest on the Nasdaq down 1.6% in the first week of August?

The Rasmussen investor confidence index at 80.4?  Call us when it hits 50, which in the past was a “classic” washout level.

Investors Intelligence did show the bull share declining further this past week, to 33.3% from 36.7%.  But the bear share barely budged and is still lower than the bull share at 31.2%.  Are we supposed to believe that at the market lows, there will still be more bulls than bears out there? Hardly.  At true lows, the bulls are hiding under table screaming “uncle!”.

Yes, Market Vane equity sentiment is down to 46, but in truth, this metric is usually in a 20-30% range when the market correction ends.  We are waiting patiently.

As for bonds, well, Market Vane sentiment is 73%. Now what is so bubbly about that.  Call us on extreme positive sentiment when this measure of excessive bullishness is closer to 90%, and we’ll be in the correction camp hopefully by the time this happens.”

I would tend to agree.  We have seen nothing in the fear gauges that convinces me that people believe in a sustained downturn in the economy. The cult of the equity investor has spent the last several months debating the possibility of a bubble in bonds, however, almost every single person who makes these claims is an owner of stocks and I have more and more trouble finding people these days who believe in bonds.  Yet, for some odd reason there is a never ending love affair with the equity portion of their portfolio.  Perhaps the bubble they should be more concerned about is the one that has been imploding underneath them over the course of the last 10 years. 


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STOCK MARKET OPTIMISM CONTINUES TO SURGE

STOCK MARKET OPTIMISM CONTINUES TO SURGE

Courtesy of The Pragmatic Capitalist 

Sentiment data is surging this week.   The Investor’s Intelligence poll is showing a new high in bullishness and a new low in bearishness.  18.9% of advisers tracked in the polling are bearish on stocks.  Bullishness has now surged to 51.1%.   Bullish sentiment is surging versus last week’s reading of 48.9%.

The latest Merrill Lynch Fund Manager Survey is showing similar optimism.   71% of the respondents  believe that earnings will jump 10% or more over the next 12 months.  This is up dramatically from 53% in March.  The survey also showed that 52% of managers are now overweight equities versus just 33% in February.  Michael Hartnett, Chief Equity Strategist at B of A Merrill Lynch says the Goldilocks scenario is priced into stocks:

“April’s survey shows a growing number of investors envisaging a Goldilocks scenario of above trend growth and benign inflation. The findings are consistent with the view that the US consumer, far from remaining in intensive care, is on the path back to good health.”

Today’s AAII poll showed the same trend in wild bullishness.  Bullish sentiment surged to 48.5%.  This is the highest bullish sentiment since the beginning of the year.  Charles Rotblut at AAII notes that the current skew between bulls and bears is consistent with periods prior to a pull-back, but not representing “irrational exuberance”:

“The spread between bullish and bearish sentiment is at +19. This is a level that has correlated with the past few market pullbacks, though is not a level that suggests irrational exuberance.”

aaii1 STOCK MARKET OPTIMISM CONTINUES TO SURGE

Source: AAII, Investorsintelligence.com 


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THE 2 BIGGEST RISKS TO THE BULL MARKET

THE 2 BIGGEST RISKS TO THE BULL MARKET

Courtesy of The Pragmatic Capitalist

This is a re-post from an article we wrote for TheStreet.com:

The rally off the March 8th lows has been nothing but spectacular.   In hindsight, it’s clear that investors overreacted to the downside, but as stocks surge more than 50% it’s time to begin pondering whether the current rally is a bit ahead of itself.  Contrary to my bottom call on March 8th when I said it was time to invest in risky assets (a full history of my 2008/9 calls can be found here including our 2008 crash call and March 8 buy call), now is the time to put on your risk management cap on as a number of various threats begin to pop up across the market.    I recently turned near-term bearish on stocks due to 2 primary reasons: sentiment & seasonality.

1)  Sentiment – As I often say, psychology drives markets.  After months of skepticism regarding the rally we are finally beginning to see an overwhelming amount of bullishness.  This is a screaming contrarian indicator.  The latest consumer confidence readings showed a marked jump to 54.1 and bullish sentiment among fund managers has soared to its highest level since 2003:

The latest Merrill Lynch fund managers survey shows an extraordinary jump in optimistic sentiment.   The survey makes up the current psychology of 204 portfolio managers running over $550B in assets.  The report shows a 63% jump in sentiment since July and the highest reading since November of 2003.

After months of short squeezes and failed market declines this optimistic sentiment has begun to eat into one of the fuels of this rally: short sellers.  Recent short sales data shows the lowest readings since the market tanked in early February.  As we lose the short sellers we lose an important driver of higher prices.

BESPOKE THE 2 BIGGEST RISKS TO THE BULL MARKET

Perhaps most important has been the enormous shift in analyst estimates.  After turning bearish in early June, I reversed the position in early July for one reason – earnings.  My analysis led me to believe that estimates were far too low primarily due to the fact that analysts were not accounting for cost cuts.  The estimates have been outrageously low, but now as the consensus begins to believe in a full blown recovery the


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ValueWalk

Authors@Wharton Speaker - Satya Nadella

By VW Staff. Originally published at ValueWalk.

Satya Nadella, the CEO of Microsoft sits down with Professor Adam Grant to talk about his new book Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone. The event, part of the 2017-2018 Authors@Wharton Speaker Series took place on Tuesday, February 6th and took place at the University of Pennsylvania’s Irvine Auditorium.

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Zero Hedge

Assange Hits Back At The Intercept - Claims "Obsessive And Obscenity-Laden" Campaign Against Him

Courtesy of ZeroHedge. View original post here.

Julian Assange hit back at The Intercept over a February 14 article claiming he backed Donald Trump's presidential campaign in leaked group chats from a disgruntled former WikiLeaks associate who set up the chat room. 

[I]n the fall of 2015, Trump was polling at less than 30 percent among Republican voters, neck-and-neck with neurosurgeon Ben Carson, and Assange spoke freely about why WikiLeaks wanted Clinton and the Democrats to lose the election.

We believe it would be much better for GOP...



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Phil's Favorites

Russian interventions in other people's elections: A brief history

 

Russian interventions in other people's elections: A brief history

Demonstrators against Russian military actions in Ukraine rally in New York, March 2, 2014. AP Photo/John Minchillo

Courtesy of Eric Lohr, American University

U.S. Special counsel Robert Mueller on Feb. 16 indicted Russian individuals and entities for interference in the U.S. presidential election.

This is not a one-off act of Russian interference. In the previous nine years, Russia has invaded its ne...



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Insider Scoop

Walmart, Target Are Susquehanna's Top Picks Ahead Of Retail Earnings Season

Courtesy of Benzinga.

Related WMT Upcoming Earnings: Hurricane Effects Still Trickling Through For Home Depot? Did Walmart Meet It...

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Chart School

Rallies Continue But Still Considered Relief Bounces

Courtesy of Declan.

The bounces playing out for markets still have the look of relief bounces - at least until technicals confirm net bullishness.

However,  long opportunities present themselves. For the S&P, price action looks to be confirming a double bottom which should be enough to see a challenge of 2,873. Today's volume was lighter which suggests the rally from here will be a struggle but 'climbing the wall of worry' will suit bulls at this point.


The Nasdaq played out a similar move to the S&...

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Digital Currencies

Bitcoin Volatility Sparks Surge In Crypto Hedge Funds

Courtesy of ZeroHedge. View original post here.

Despite Bitcoin being down 30% in 2018, new data shows a the number of hedge funds focused on cryptocurrency trading has doubled in recent months, seemingly confirming Mike Novogratz (and others) forecast that rising institutional interest would spark the next leg higher.

It's not been a pretty year for cryptos so far...

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Biotech

What is 'right to try,' and could it help?

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

 

What is 'right to try,' and could it help?

In this March 18, 2011 photo, Cassidy Hempel waved at hospital staff as she was being treated for a rare disorder. Her mother Chris, left, fought to gain permission for an experimental drug. AP Photo/Marcio Jose Sanchez

Morten Wendelbo, Texas A&M University and Timothy Callaghan, ...



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Mapping The Market

The tricks propagandists use to beat science

Via Jean-Luc

How propagandist beat science – they did it for the tobacco industry and now it's in favor of the energy companies:

The tricks propagandists use to beat science

The original tobacco strategy involved several lines of attack. One of these was to fund research that supported the industry and then publish only the results that fit the required narrative. “For instance, in 1954 the TIRC distributed a pamphlet entitled ‘A Scientific Perspective on the Cigarette Controversy’ to nearly 200,000 doctors, journalists, and policy-makers, in which they emphasized favorable research and questioned results supporting the contrary view,” say Weatherall and co, who call this approach biased production.

A second approach promoted independent research that happened to support ...



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Members' Corner

An Interview with David Brin

Our guest David Brin is an astrophysicist, technology consultant, and best-selling author who speaks, writes, and advises on a range of topics including national defense, creativity, and space exploration. He is also a well-known and influential futurist (one of four “World's Best Futurists,” according to The Urban Developer), and it is his ideas on the future, specifically the future of civilization, that I hope to learn about here.   

Ilene: David, you base many of your predictions of the future on a theory of historica...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

NewsWare: Watch Today's Webinar!

 

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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

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...

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