Posts Tagged ‘bullish sentiment’

SMALL INVESTOR BULLISH SENTIMENT SOARS NEAR 2010 HIGH

SMALL INVESTOR BULLISH SENTIMENT SOARS NEAR 2010 HIGH

Courtesy of The Pragmatic Capitalist

Talk about a schizophrenic market. Just two weeks ago the sky was falling.  As sentiment plummeted the excessively fearful shorts were caught flat footed and an impressive short covering rally ensued. Now, just a few economic reports and a brief rally later small investors are convinced that there are no risks coming down the pike.  The AAII’s bullish sentiment survey showed a remarkable rebound in recent weeks. After hitting 21% just two weeks ago the percentage of bullish investors has surged to 43.9% – the highest reading since April 15th when sentiment hit 48.5% and just days prior to the Q1 market peak.  AAII elaborated on the results:

“Bullish sentiment of individual investors rose 13.1 percentage points to 43.9% in the latest AAII Sentiment Survey. This is the most bullish individual investors have been on the market outlook six months forward since bullish sentiment reached 48.5% on April 15, 2010. The historical average is 39%.

Over the last two weeks, investor sentiment has swung from bearish sentiment outweighing bullish sentiment by 28.7 percentage points to bullish sentiment outweighing bearish sentiment by 12.3 percentage points.

Bullish investors predominately mention that pessimism seems to have reached an extreme which should favor stocks going forward–the sky is not falling.”

AAII SMALL INVESTOR BULLISH SENTIMENT SOARS NEAR 2010 HIGH

The Investors Intelligence survey also showed a rebound in sentiment as bullishness jumped to 33.3% from last week’s reading of 29.4%.  Although there has been a slight rebound in this data it is not at the same extremes seen in the AAII data.

II1 SMALL INVESTOR BULLISH SENTIMENT SOARS NEAR 2010 HIGH

Source: AAII, II 


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BULLISH SENTIMENT SURGES NEAR JANUARY HIGH

BULLISH SENTIMENT SURGES NEAR JANUARY HIGH

Courtesy of The Pragmatic Capitalist 

The warning flags continue to pop up all over the place and investors continue to run head first into stocks.  None of the recent warning flags are as alarming as today’s huge spike in individual investor sentiment.  Small investor bullishness surged to 45.3% versus last week as the market continues to melt higher.  This has served as a fairly reliable contrarian indicator in the past as small investors tend to pile into stocks near the end of rallies.

Individual investor sentiment has reached levels that have historically been followed by very poor equity returns.  A few of the notable periods when investor sentiment was this high include:

  • A 50% reading prior to a 3 month 10% sell-off in Q2 2008
  • A 45% reading prior to the 2008 market crash
  • A 47% reading prior to the 20% sell-off to the March 2009 lows
  • A 49% reading prior to the January 2010 sell-off

aaii1 BULLISH SENTIMENT SURGES NEAR JANUARY HIGH

No indicator is perfect and this one has certainly been excessively bullish at points during the 2009 rally, but it confirms the growing bullish trend that we saw in yesterday’s Investors Intelligence poll where financial advisers increased bullishness to 44.9%.   With institutional investors stacking up on the bullish side of the trade and now individual investors stacking up on the same side you just have to wonder – who is left to buy stocks?   Better yet, who are they going to sell to? 

 


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CONTRARIAN SIGN? PORTFOLIO MANAGERS ARE GETTING VERY BULLISH

CONTRARIAN SIGN? PORTFOLIO MANAGERS ARE GETTING VERY BULLISH

Courtesy of The Pragmatic Capitalist 

The sentiment signals are starting to stack up against the bulls.  Last week Mark Hulbert at MarketWatch reported that Advisory bullishness was “dangerously high”.  He reports that bullishness hasn’t been this high since before the 2007 market highs:

“Based on the several hundred investment advisers I track, I’d have to say that bullish sentiment is approaching dangerously high levels. Consider the Hulbert Stock Newsletter Sentiment Index (HSNSI), which represents the average recommended stock market exposure among a subset of short term stock market timers tracked by the Hulbert Financial Digest.

It currently stands at 62.8%, up from 13.8% just one month ago. That’s an awfully big jump for so short a period of time, especially considering that the Dow Jones Industrial Average rose a modest 4.4% over this period.

Also worrying is that, with but one exception, the HSNSI is now at its highest level since early 2007, more than three years ago.”

That one exception came in early January just before the market rolled over 9%.

In addition, David Rosenberg noted just yesterday, that portfolio managers are now sitting on near-record low cash levels:

“as charts below from the ICI illustrates, portfolio managers have been so nervous to miss any up-moves that they have run down their cash holdings to 3.6% of assets from nearly 6% a year ago — the largest decline in 19 years.  Equity cash ratios are back to where they were in September 2007, just as the stock market was hitting its peak.”

prto CONTRARIAN SIGN? PORTFOLIO MANAGERS ARE GETTING VERY BULLISH

This new found bullishness by portfolio managers and advisors could be seen as a contrarian sign of things to come.


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BULLISH SENTIMENT DROPS SUBSTANTIALLY

BULLISH SENTIMENT DROPS SUBSTANTIALLY

Courtesy of The Pragmatic Capitalist

After having entered the year in an overwhelmingly bullish fashion, investors have tempered their bullish perspective a bit.  The latest sentiment reading from AAII showed a sharp decline from 49% to 41% bulls.  Many investors have expressed caution due to the high reading coming into the beginning of the year.   This less bullish position is consistent with the recent data on small speculators from the CFTC.

aaii BULLISH SENTIMENT DROPS SUBSTANTIALLY

 


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BULLISH SENTIMENT WAVES WARNING FLAGS

BULLISH SENTIMENT WAVES WARNING FLAGS

Courtesy of The Pragmatic Capitalist  

Sentiment hasn’t been this positive about the stock market since just before the 1987 market crash.  The latest readings from Investors Intelligence and AAII show that newsletters and small investors are very bullish in the near-term.  This could be a major warning flag about the potential short-term performance of the equity markets.

The Investors Intelligence poll, which tracks 140 different newsletters, hasn’t been this bullish(?) since 1987.  This has proven to be a superb short-term indicator.  The last extreme was a 54% bearish reading at the October lows last year.  Now, at 15% bears, the bulls feel equity markets have much room to run.

The survey of small investors at AAII is also showing an extreme level of optimism with 49% of investors bullish. It’s interesting to note the high level of put buying on Friday as investors hedged themselves heading into the new year.

AAII BULLISH SENTIMENT WAVES WARNING FLAGS

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Phil's Favorites

While coronavirus rages, bitcoin has made a leap towards the mainstream

 

While coronavirus rages, bitcoin has made a leap towards the mainstream

Get used to it. Anastasiia Bakai

Courtesy of Iwa Salami, University of East London

Anyone holding bitcoin would have watched the market with alarm in recent weeks. The virtual currency, whose price other cryptocurrencies like ethereum and litecoin largely follow, plummeted from more than US$10,000 (£8,206) in mid-February to briefly below US$4,000 on March 13. Despite recovering to the mid-US$6,000s at the time of writin...



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Digital Currencies

While coronavirus rages, bitcoin has made a leap towards the mainstream

 

While coronavirus rages, bitcoin has made a leap towards the mainstream

Get used to it. Anastasiia Bakai

Courtesy of Iwa Salami, University of East London

Anyone holding bitcoin would have watched the market with alarm in recent weeks. The virtual currency, whose price other cryptocurrencies like ethereum and litecoin largely follow, plummeted from more than US$10,000 (£8,206) in mid-February to briefly below US$4,000 on March 13. Despite recovering to the mid-US$6,000s at the time of writin...



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Courtesy of ZeroHedge View original post here.

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The world before this coronavirus and after cannot be the same

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Courtesy of Ian Goldin, University of Oxford and Robert Muggah, Pontifical Catholic University of Rio de Janeiro (PUC-Rio)

With COVID-19 infections now evident in 176 countries, the pandemic is the most significant threat to humanity since the second world war. Then, as now, confidence in international cooperation and institutions plumbed new lows.

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Psyched is a bi-monthly column covering the most important developments in the industry of medicinal psychedelics. We hope you follow us periodically as we report on the growth of this exciting new industry.

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The Technical Traders

These Index Charts Will Calm You Down

Courtesy of Technical Traders

I put together this video that will calm you down, because knowing where are within the stock market cycles, and the economy makes all the difference.

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Kimble Charting Solutions

Broadest Of All Stock Indices Testing Critical Support, Says Joe Friday!

Courtesy of Chris Kimble

One of the broadest indices in the states remains in a long-term bullish trend, where a critical support test is in play.

The chart looks at the Wilshire 5000 on a monthly basis over the past 35-years.

The index has spent the majority of the past three decades inside of rising channel (1). It hit the top of this multi-decade channel to start off the year, where it created a monthly bearish reversal pattern.

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Cycle Trading - Funny when it comes due

Courtesy of Read the Ticker

Non believers of cycles become fast believers when the heat of the moment is upon them.

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Bloody Mob Sh*t: An Interview with Lincoln's Bible

 

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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

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The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

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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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