Posts Tagged ‘investor sentiment’

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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BULLISH SENTIMENT STILL EXTREMELY HIGH

The Pragmatic Capitalist notes that BULLISH SENTIMENT STILL EXTREMELY HIGH. – Ilene 

Courtesy of The Pragmatic Capitalist 

The latest investor sentiment surveys show continued levels of high bullishness.  This week’s AAII sentiment survey showed another increase in bullish sentiment to 49.7%. Charles Rotblut of AAII detailed the results:

“Bullish sentiment rose 2.3 points to 49.7% in the latest AAII Sentiment Survey. Optimism among individual investors that stock prices will rise over the next six months remained above its historical average of 39% for the 13th consecutive week.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, fell 3.8 percentage points to 24.1%. This was the 17th 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, rose 1.5 percentage points to 26.2%. Pessimism has been below its historical average for 10 out of the last 12 weeks.

Though the markets have been volatile on a day-to-day basis, the S&P 500 is at approximately the same level it was at the start of November. The ability of stocks to hold onto their gains despite fears about U.S. monetary policy and European sovereign debt problems is helping individual investors remain upbeat about the short-term prospects for stocks. It should be noted that our November Asset Allocation Survey showed AAII members increased their allocations to stocks and stock funds for the fourth consecutive month.

As stated above, bullish sentiment is above its historical average for the 13th consecutive week. This is the longest streak of above-average readings since 2004, when bullish sentiment stayed above its historical average for 19 consecutive weeks. What happened afterwards? Stocks were volatile, with the S&P 500 falling by more than 75 points, but six months after the streak ended, the large-cap index was essentially unchanged.”

The Investor’s Intelligence survey is showing similar high levels of optimism.  This week’s reading was down marginally from last week to 55.4%, but remains well above historical norms:

Source: Investor’s Intelligence, AAII


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ONE OVERVALUED MARKET?

ONE OVERVALUED MARKET?

Courtesy of The Pragmatic Capitalist

A recent research note from Gluskin Sheff’s David Rosenberg highlights the high valuation, high sentiment, and technicals  of the equity markets to highlight the bearish case:

  • Fully 85% of S&P 500 stocks are now above their 50-day moving averages, and;
  • The median P/E multiple is now a whopping 22.2x.
  • The degree of bullish sentiment in the latest Investor Intelligence Poll is a huge 72%;

Of course, much of this has been the case throughout the rally. While the technicals appear somewhat extended this is not unusual during a major market rally.   As we can see in the chart below, stocks have been well above their 50 day moving average for much of the rally and this has not served as an impediment:

50ma ONE OVERVALUED MARKET?

As for earnings, we all know my thoughts here.  Earnings hit such a deep trough and estimates spiked so low that this has actually been fuel for the fire.  It might sound counter-intuitive, but the trough in estimates actually led to very poor earnings expectations which has fueled the rally higher.  As we’ve explained before, using the PE ratio to time investment decisions is a recipe for disaster.  The PE ratio is nothing more than a moving price target (which rarely reflects the true market value) divided by the guesstimates of the analyst community.  If we’ve learned one thing over the last 6 months it is that analysts can’t guess their way out of a wet paper bag.  The result is, in my opinion, one of the most misleading and overused investment indicators of all time.

In terms of sentiment we continue to see conflicting messages.  While the Investors Intelligence poll remains overly bullish we continue to see bearish data from the CFTC’s commitment of traders report, neutral data from the AAII and neutral data from State Street’s Institutional Money poll.  Cherry picking one report doesn’t mean sentiment is overly bullish.

There are real fundamental reasons to worry about the long-term viability of this rally, but these three should be taken with a grain of salt for now.

 


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Looks Like S&P Equity Anlaysts Are As Competent As Their Debt Analysts…..

Looks Like S&P Equity Anlaysts Are As Competent As Their Debt Analysts…..

Courtesy of Jan-Martin Feddersen at Immobilienblasen

This kind of expertise from Wall Street Finest based only on hope of a better bailout deal ( proposed from a major sharholder…. ) sums the market action up….. At least S&P isn´t able to play the Pump & Dump like Goldman & others…. Keep in mind that AIG is one of the Zombie Stocks making up to 20 percent of daily NYSE volume…..

Diese "Expertenmeinung" die einzig und allein auf einem noch besseren Bailoutdeal ( passenderweise vorgeschlagen von einem der Hauptaktionäre ) basiert spiegelt recht schön wider was momentan an den Märkten abgeht…..Immerhin kann man S&P nicht wie z.B. Goldman vorwerfen das altbekannte Pump & Dump zu praktizieren…. Man sollte sich zusärtlich noch ins Gedächnis rufen das AIG eine der Zombie Aktien ist die momentan für knapp 20% des täglichen Handelsvolumens stehen…..


AIG Shares Shoot up on Proposal to Ease Government Loan Terms MarketBeat

AIG jumped roughly 11% today after the powerful House Oversight and Government Reform Committee confirmed receiving a proposal from former CEO Maurice “Hank” Greenberg to restructure the government’s bailout of the insurance giant.

The reports prompted S&P Equity Research to boost AIG to “hold” from “sell.”

We see this news buoying the shares near term,” S&P’s Catherine Seifert wrote in quick squib earlier today. But before you sink the kid’s college fund into AIG shares, keep this in mind:

It’s far from clear that there’s actually any actual equity value in this company.

“We note June 30 tangible common equity was minus $261.66 per share,” Seifert states

Needless to say that according to Yahoo Finance there is no sell rating (10 hold) on AIG…..;-)

UPDATE: Traders Seek Fortune in AIG, a Stock Once Left for Dead WSJ

 


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SENTIMENT UPDATE – INVESTORS ARE COMPLACENT

SENTIMENT UPDATE – INVESTORS ARE COMPLACENT

Courtesy of The Pragmatic Capitalist

Earlier this week we mentioned the sharp change in short interest over the prior months.   I wrote:

Much of the fuel for the 50% rally in the S&P 500 has come from short covering.  The general skepticism surrounding the recovery has actually resulted in price gains.  But as the rally gets long in the tooth we could be seeing signs that short covering will have a much smaller impact.

The huge declines in short interest are a sign of capitulation in short selling.  The bears have been truly slaughtered during this bull run.  The change in short interest should be viewed as a contrarian indicator at this juncture.  This is also a clear sign of a major change in investor sentiment.

In addition to major changes in short interest, this weeks AAII poll displayed a remarkably bullish reading of 51%.  We haven’t seen a reading this high since May 2008 just after the government intervened in Bear Stearns and the market rallied.  At the time, everyone was bullish and was declaring that a recession was off the table and a second half recovery was a near certainty.  Of course, when everyone is on the same side of the boat, it’s wise to either move to the other side or simply jump off.  The bullish side of the trade, in terms of sentiment is incredibly crowded.  Positive sentiment can remain high for extended periods of time and can be a major driver in higher prices, however, these environments make for very poor risk/reward scenarios.  If any element of doubt or uncertainty creeps into the market we could easily see a sharp and dramatic correction.

AAII

 

 


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Zero Hedge

Futures Rebound Back Near All Time Highs, Precious Metals Bounce After Crash

Courtesy of ZeroHedge View original post here.

Reversing yesterday's sharp Nasdaq and precious metals-led selloff, S&P futures rebounded from Tuesday’s drop ignoring the continuing deadlock in Washington on more stimulus spending which could significantly delay the U.S. virus rescue package, and pushing the Emini to within inches of the all time high.

Energy stocks Exxon Mobil gained 1.1% and Chevron Corp added 1.5% in premarket trading, alongside gains in ConocoPhi...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Phil's Favorites

Before Kamala Harris became Biden's running mate, Shirley Chisholm and other Black women aimed for the White House

 

Before Kamala Harris became Biden's running mate, Shirley Chisholm and other Black women aimed for the White House

Kamala Harris, a U.S. senator from California, endorsed Joe Biden for president in March. Now she is his vice presidential nominee. Jeff Kowalsky/AFP via Getty Images

Courtesy of Sharon Austin, University of Florida

U.S. Sen. Kamala Harris, the ...



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Biotech/COVID-19

Trillions in coronavirus spending is putting AOC's favorite economic theory to the test

 

Trillions in coronavirus spending is putting AOC's favorite economic theory to the test

The Fed can create all the money Uncle Sam needs. GeorgePeters/Getty Images

Courtesy of Steven Pressman, Colorado State University

French philosopher Voltaire famously quipped: “If God did not exist, it would be necessary to invent him.” Something similar can be said of modern monetary theory, also known as MMT, because it may be the economy’s only hope to get through the pandemic.

Coined by Australia...



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ValueWalk

Bonhoeffer Fund 2Q20 Commentary - Case Study: Antero Midstream

By Jacob Wolinsky. Originally published at ValueWalk.

Bonhoeffer Fund commentary for the second quarter ended July 2020, providing a case study on Antero Midstream Corp (NYSE:AM).

Q2 2020 hedge fund letters, conferences and more

Dear Partner,

The Bonhoeffer Fund returned 21.7% net of fees in the second quarter of 2020. Given the unique portfolio Bonhoeffer manages, I have struggled to find an appropriate benchmark but have determined that the DFA International Small Cap Value Fund offers the closest representative comparison to Bonhoeffer....



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Kimble Charting Solutions

Doc Copper Bear Market Resistance Kiss In Play!

Courtesy of Chris Kimble

Is ole Doc Copper about to ends its 9-year bear market? I suspect we will find out the answer to the question very soon!

Doc Copper has created a series of higher lows inside the falling channel (1) since it peaked back in 2011.

The rally from the lows in March of this year, has Doc Copper testing the top of its falling channel as well as a support/resistance price zone at (2).

With Doc Copper still in a bear market (lower highs for 9-years), this price test comes into play as important resistance at (2).

If Doc Copper breaks out at (2), it would send...



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Chart School

Silver Big Channel

Courtesy of Read the Ticker

Big channels are the sand pit of price action. Lets review some big trends of these past months.


GLD
- Moving higher to upper solid red line channel


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XAU
- Ready to pause, or simply explode.



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SILVER
- Ready to pause, or simply explode.


Click for popup. Clear your browser cache if image i...



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Digital Currencies

Raoul Pal: "It May Not Be Worth Owning Any Asset Other Than Bitcoin"

Courtesy of ZeroHedge View original post here.

Authored by Turner Wright via CoinTelegraph.com,

Raoul Pal, CEO and founder of Real Vision, says Bitcoin may soon become his only asset for long-term investments.

image courtesy of CoinTelegraph ...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

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No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
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  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
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Promotions

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Feb. 26, 1pm EST

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

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Mike will show off the TradeExchange's new platform which you can try for free.  

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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