Wednesday, September 30, 2009
Tuesday, September 29, 2009
Tuesday, September 22, 2009
Thursday, September 17, 2009
Wednesday, September 16, 2009
Advisors Sentiment
Although the major averages pushed higher again last week there was very little activity amongst the newsletter writers. The numbers of bulls and corrections pulled back a little bit while the bears were up less than 1%.
The bulls counted 47.8%, down from 48.3% last week and 51.6% two-weeks prior to that. Those readings were the highest for the bulls since the end of 2007. Markets reached all-time record highs that October when the bulls were 62.0%. By the end of that year the averages were still within 5% of the peak but the bulls had retreated to the low 50%s. Sentiment most often shows movement away from its extremes prior to the overall market action.
The bears were up slightly to 24.4% from 23.6% the previous week. They numbered as few as 19.8% two weeks before that. The October 2007 high showed a similar bear level at 19.6%, with readings in the mid-20%s over the following couple of months.
Advisors classified as correction dipped to 27.8% from 28.1%. This group is mostly bullish but they expect an intervening market retreat before a rally begins. They look to buy on dips. Advisors often shift from bearish to correction before they are ready to make a bullish commitment.
The difference between the bulls and bears continues to narrow, now at 23.4%. That was down from 24.7%, 26.5% and 31.8% the previous three weeks. Readings above +20% are bearish. At the March 2009 lows the spread was -20.8%; a bullish signal that the markets had turnaround potential.
The recent advisory sentiment levels have negative implications for the future although they don't mean an immediate market drop. That do show markets are trading at the area of a potential top and that risk has increased. That is the opposite of the readings barely six months ago when we counted just 26.4% bulls and 47.2% bears, when the averages were achieving their early March lows. That showed risk had declined to make buying shares attractive.
Sentiment readings remain bearish, but they have improved over the last three weeks.
The bulls counted 47.8%, down from 48.3% last week and 51.6% two-weeks prior to that. Those readings were the highest for the bulls since the end of 2007. Markets reached all-time record highs that October when the bulls were 62.0%. By the end of that year the averages were still within 5% of the peak but the bulls had retreated to the low 50%s. Sentiment most often shows movement away from its extremes prior to the overall market action.
The bears were up slightly to 24.4% from 23.6% the previous week. They numbered as few as 19.8% two weeks before that. The October 2007 high showed a similar bear level at 19.6%, with readings in the mid-20%s over the following couple of months.
Advisors classified as correction dipped to 27.8% from 28.1%. This group is mostly bullish but they expect an intervening market retreat before a rally begins. They look to buy on dips. Advisors often shift from bearish to correction before they are ready to make a bullish commitment.
The difference between the bulls and bears continues to narrow, now at 23.4%. That was down from 24.7%, 26.5% and 31.8% the previous three weeks. Readings above +20% are bearish. At the March 2009 lows the spread was -20.8%; a bullish signal that the markets had turnaround potential.
The recent advisory sentiment levels have negative implications for the future although they don't mean an immediate market drop. That do show markets are trading at the area of a potential top and that risk has increased. That is the opposite of the readings barely six months ago when we counted just 26.4% bulls and 47.2% bears, when the averages were achieving their early March lows. That showed risk had declined to make buying shares attractive.
Sentiment readings remain bearish, but they have improved over the last three weeks.
Sunday, September 13, 2009
Friday, September 11, 2009
Thursday, September 10, 2009
Wednesday, September 2, 2009
SENTIMENT NUMBERS
Overview
Despite an eight day winning streak for the DJ Industrials the number of bullish advisors slipped a bit and there was a sizable increase for the bears. The bears rebounded after one week below the 20% level, a reading not seen since October 2007. A few editors noted that September is one of the worst months of the year for stocks. It is also followed by October, which has seen a number of unpleasant market occurrences over its history.
The bulls moved down to 50.6% after reaching a twenty-month high at 51.6% the previous week. That was more than double the reading of 22.2% shown at the first bear market bottom last October. We counted only 23.1% bulls at the second November low. The final March index low showed 26.4% bulls for a divergence that told us the bottoming action was complete.
The bears rose to 24.1% from 19.8% the previous week (a 34.6% decline from their highest level in the bear market, shown last October at 54.4%). The November and March bear counts were 49.5% and 47.2%.
Most of the new bears shifted from the correction camp, which ended at 25.3% from 28.6% a week ago. This group often appears to be 'hedging their bets' and is an intermediary's stop on the way from bearish to bullish or vice versa. Following the event a 'correction' advisory can usually say he was almost correct in his outlook.
We continue to rate the sentiment as bearish. The recent and current optimism means the advisors have been recommending equities to their readers who shouldn't have a lot of cash left on the sidelines (assuming they've been following the advisors view). Negative sentiment doesn't always means a sharp, immediate market drop, but it is a sign of elevated risk. Close attention is needed to preserve gains.
The difference between the bulls and bears narrowed to 26.5%, down from 31.8% last week. That is a small improvement but those readings are also typical of market tops.
Despite an eight day winning streak for the DJ Industrials the number of bullish advisors slipped a bit and there was a sizable increase for the bears. The bears rebounded after one week below the 20% level, a reading not seen since October 2007. A few editors noted that September is one of the worst months of the year for stocks. It is also followed by October, which has seen a number of unpleasant market occurrences over its history.
The bulls moved down to 50.6% after reaching a twenty-month high at 51.6% the previous week. That was more than double the reading of 22.2% shown at the first bear market bottom last October. We counted only 23.1% bulls at the second November low. The final March index low showed 26.4% bulls for a divergence that told us the bottoming action was complete.
The bears rose to 24.1% from 19.8% the previous week (a 34.6% decline from their highest level in the bear market, shown last October at 54.4%). The November and March bear counts were 49.5% and 47.2%.
Most of the new bears shifted from the correction camp, which ended at 25.3% from 28.6% a week ago. This group often appears to be 'hedging their bets' and is an intermediary's stop on the way from bearish to bullish or vice versa. Following the event a 'correction' advisory can usually say he was almost correct in his outlook.
We continue to rate the sentiment as bearish. The recent and current optimism means the advisors have been recommending equities to their readers who shouldn't have a lot of cash left on the sidelines (assuming they've been following the advisors view). Negative sentiment doesn't always means a sharp, immediate market drop, but it is a sign of elevated risk. Close attention is needed to preserve gains.
The difference between the bulls and bears narrowed to 26.5%, down from 31.8% last week. That is a small improvement but those readings are also typical of market tops.
Tuesday, September 1, 2009
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