SENTIMENT NUMBERS

Overview

Over the last week virtually all averages achieved further highs to show their best levels since mid-2008. Even number barriers continue to fall with the S&P 500 breaching 1,200 and the NASDAQ Composite 2,500, following the DJ Industrials break above 11,000. Those gains continue to slowly grow the number of bullish advisors with the latest readings almost equaling the optimism shown with the market highs at the start of the year.

The bulls moved up to 53.3% from 51.1% the week before. That just about equals the 53.4% reading from the first trading week of this year, when all of the averages were making new highs. Those levels were followed by quick 9% retreats over the next month with the bulls contracting sharply to 34.1%. That depressed level for the bulls confirmed a buying opportunity. The two readings above 53% showed the most bulls since late 2007 when their number was falling from a very negative reading of 62.0% shown at the October 2007 market high.

There were also fewer bears at 17.4%, down from 18.9% the prior two-weeks. That is the fewest bears since we counted them at 15.6% with the earlier 2010 market high. You would have to go all the way back to 1987 to see the same low level of advisor pessimism.

The advisors classified as correction fell to 29.3% from 30.0% last week. This group has held at a high level throughout this year, as a partial refuge for some skeptical editors who wish to avoid an outright bearish view. During this year, at the February low, we counted the highest correction reading in over 26-years. That goes back to late 1983, after stocks had their initial surge from the bear market lows of 1982. The correction group look for a near term market drop before trading returns to highs.

With the latest data we now classify the advisory sentiment as negative, similar to the outlook that started this year. Markets can still move higher and the bulls could approach 60% before final tops are in place. In the near-term, though we would expect some modest pull backs to consolidate the two-month gain. At present we do not project a correction approaching 10%.

The difference between the bulls and bears is now bearish at +35.9%, up from +32.3%. The spread was +37.5% for the first week of 2010 and +42.6% at the October 2007 all-time market high.

Managing a short in AKS steel

Today 04/09 Started a position in the first half hour in AKS still at 23.46. Reason??? On Thursday AKS started wave 4 up on 60min chart, I was watching closely how the stock was gonna handle its 50 ema and TL resistance as a potential targets to end Wave 4. As the market was moving higher, X was dragging the sector lower and AKS failed to take 50 ema and TL beginning Wave 5 down. Here is my first chart of the day in AKS, https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTRk5JshHI0HsV_EVtdAM4R2r3dOVXlfsZp5szNWMO9w0kHwxNkshtmct-7Po-hdltMX3pAPJVRX5Q65echXI-JI26eEYwnSSPK9zE0nfPXwgCK7i4FUEamTFvXDVZ7BSr_PlYjOHMkw33/s1600/Screen+shot+2010-04-09+at+4.02.21+AM.png
As the day went on, market was moving slightly higher and X and AKS were making new lows, I made an update on AKS 60min chart posting my first and second target to close my position. here is the chart: https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgfyBHuh_08y8VaChM5SFLFnJ2WRzQO9cZn5C9wm_WMRfpPx6IyZi8nCAq9MKix7yGSjcJA6_F1d2_M3pk6ormyfZaPHrhhFpCR9zeNksU9mpktDGJyEK49SQNShNttBotOLKUoddghMcpc/s1600/Screen+shot+2010-04-09+at+6.19.17+AM.png

At 14:00pm AKS hit my first target at 22.79 and closed my trade given that the market was not having weakness I needed to hold my position to my second target or to hold it overnight. Here is AKS chart at the close, note how it bounced off TL support:
https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0VNGg9EkUyBpouIVVaQ0EE3A89uSpliuheQDuBHeVSxakPaph3ZQ2kEW6nvjLjJObh9v8pAilruEcOD8_cIftJtp5yKLo7HpBm7mY5V67lg4qRivNjZCq01N6RZtGoGHOHAh2xmjO_OA2/s1600/Screen+shot+2010-04-09+at+8.56.54+PM.png

.... Going into monday, I ll be watching AKS again for a potential right shoulder of a Head & Shoulder pattern, lots of resistance ahead 200 ema, 50ema and TL resistance. Here is what Im going to be looking at:
https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhCtPjW0oSFUWM7JNAQTcx6XtMLeTzR3ENaXZQjU4RtB_-k_AN1NtNvk_GexIvJoU1s820TtXkWRRP0yE5FT5a4RF11hR3FKmr4FHnmJqj4DipZSqXn1LkDTQCUw9qfsXGzquSVZK_fxU6c/s1600/Screen+shot+2010-04-09+at+9.08.35+PM.png

Remember, Before I trade a stock I trade the Market first (watch the market and figure out what could do next), I trade the sector second (in this example I looked at the leader of the sector X and the Index $DJUSST)...... and trade the stock last.

Best trading to all...... ALOHA

UPS 60min

INTC

MOT 60min

UUP 60min chart

SENTIMENT NUMBERS

Overview

Investors generally tend to be a bit more optimistic at the start of a New Year. Additionally, with the averages rallying sharply for the first session of 2010, we did see a nice jump in the bulls this week. Their number again reached their highest level since Dec-07, when they were falling from 62.0% that October. Most of the new bulls came from the correction camp, as we have been anticipating but there was also a small dip in the bears.

The bears hold at the lowest reading since Apr-87, while the correction data was recently a high since Mar-92. Another concern is that some of the correction group are throwing off prior expressions of caution and expressing their optimism with a roar. Too much bullishness is bad for higher market levels as it suggests fully invested positions.

The bulls were up more than 5% to 53.4% from 48.3% a week ago. Again, that is a more than two-year high and up significantly from the Oct-08 low of 22.2%. That was the fewest bulls since 1988 and a positive signal of bottoming action. We now see excess bullishness that is approaching the danger levels of 55%-60%.

The bears were down to 15.9% from 16.9% last issue, close to the low of two weeks ago at 15.6%. That was the fewest bears since we counted 14.5% almost 23-years ago. At the Oct-07 index highs the bears fell to 19.6%. A year later their number reached 54.4%, a 14-year high.

Advisors classified as correction fell to 30.7% from 34.8%. This group is mostly bullish but they expect an intervening market retreat before the rally begins. They look to buy on dips. Advisors often shift from bearish to correction before they are ready to make a bullish commitment and vice versa. Their early December reading of 35.1% was their highest since Mar-92.

The difference between the bulls and bears was a negative 37.5%, up from 31.4% a week ago. That is the widest spread since late 2007 when it was 42%. It hit -32.2% in Oct-08.

The 10-week average of the bulls over the bears [eliminating the correction] hit 73.5%. That is a high since Mar-04 and also a signal of upcoming danger.

Bullish Theme

We regard the stock market as reasonably priced based on our earnings outlook. The economic recovery process remains on track and therefore we are raising our 2010 S&P 500 operating earnings estimate to $74.50 (from $73). Based on this earnings estimate and our fair value price/earnings ratio of 16 to 17 times operating earnings, we estimate upside potential for the S&P 500 Index in the 1200 to 1260 range going forward. Progress beyond that range will be a function of the durability of the economic recovery and the ability of the Federal Reserve to successfully manage monetary policy. As we enter 2010 the S&P 500 is trading at 15.0 times our 2010 operating earnings estimate. (5-Jan-10)
Bob Brinkers Marketimer 10789 Bradford Rd, # 210 Littleton, CO 80127 www.bobbrinker.com

Stock markets around the globe ended the first week of the new decade with decent gains as investors appeared to shrug off the news released in the December U.S, payrolls report. More than likely investors had their focus on the upcoming earnings season as it is expected that most corporations will show profit increases for the first time since the second quarter of 2007. According to Standard & Poors, profit at large U.S, companies is expected to rise 184% in the fourth quarter, breaking a string of nine quarters of profit declines. The jobs report seemingly ignored by Wall Street stated that job losses continued in December continued in December and the U.S. unemployment rate remained at 10%. Retailers were joyful this holiday season as they experienced their best month in two years, as they became more efficient and implemented tighter inventory controls.

Currently, the momentum is definitely pointed higher as both the NASDAQ and the S&P 500 closed at 52 week highs Friday with a series of higher lows and higher highs marking a solid uptrend over the past nine months. The S&P 500 will start to encounter resistance between 1200 and 1250, which is the area that previously provided support in 2008. This is 5.9% higher from current levels. Expect a correction or at least a consolidation of some sort when it reaches those levels. It is due for one! (9-Jan-10)

Harland R. Hendricksons Market Trend Follower, Edmonton AB Canada www.markettrendfollower.com

Bearish Theme

The US Presidential Election Cycle in the Stock Market: The first and second years of Presidential term have the worst on record for investors. In the last 87 years, the S&P has been down 28 years, 19 of those declining years came in the first half of a Presidential term.

Rebounding from a Crash low in the quarter when he was sworn in, with trillions of liquidity, stimulus & multi bailouts thrown into the banking system, the remaining three quarters of his Post Election year saw a remarkable recovery ending with a strongly positive gain for the year.

2010 is his Mid Term year, the worst stock market year of the Presidential Term historically. Where the Post Election Year was up, only the second terms of Bush-43, Clinton, Reagan, Truman and Coolidge avoided Mid-Term Year declines. With the Obama & Democrat polls melting down as his first year winds down, the Nov 10 Mid-Term elections may break the Democrat control of both houses of Congress. (6-Jan-10)

Ian McAvitys Deliberations on World Markets, POB 182, Adelaide St. Station Toronto, ON M5C 2J1 Canada (416-964-1359)


As I see it, the peaks remained high - in the 35-40 range - during the market advances of 2003-2007. So such a high spread might suggest a pullback but not necessarily a crash.

Overview

Stocks lost ground in light trading the week before New Years Day and then rebounded smartly back to highs on the first session of 2010. The year-end publishing schedules for most of the editors meant they failed to comment on that latest action and it should take at least another week before we get a full picture of their current outlook. There were a few negative technical changes to end last year, including just over 500 stocks with buying climaxes and downturns for some of our short term indicator charts.

This weeks data shows a small dip for the bulls for the second week but higher readings for both the bears and correction groups.

The bulls fell to 48.3%, from 51.1% and 52.2% for the two prior weeks. That latter level was the most bulls since December 2007 when their number was retreating from 62.0% shown at that Octobers all-time market high. A year later at the first bear market lows the bulls had slipped to just 22.2%. We still have not achieved the high level of advisor optimism around 60% that precedes a major stock market top.

The bears were up to 16.9% from 15.6%, a low since their April 1987 reading at 14.5%. Six months later at the market highs that October the bears were 19.6%. A year later as averages were collapsing the bears reached a fourteen year high at 54.4%.

Advisors classified as correction were up to 34.8% from 33.3% and almost back to their early December level of 35.1%. This group is mostly bullish but they expect an intervening market retreat before the rally begins. They look to buy on dips. Advisors often shift from bearish to correction before they are ready to make a bullish commitment and vice versa. They are subject to quick changes and if markets surge from their currents levels, we could see some of the correction camp shift to a bullish stance and increase that group to dangerous levels.

The difference between the bulls and bears was 31.4%. That was down from 35.5% from the previous week and it remains at negative levels. The spread was 40% in October 2007.

The 10-week average of the bulls over the bears [eliminating the correction] was 72.6%. Readings at 70% and above show too much bullishness.