June 18, 2006
I’m Thrilled: Sentiment at Worst Levels Since March 2003
Last Friday the ISE Sentiment Index recorded a level of bearishness not seen since March 2003. This combined with the spiking VIX is very bullish. I’ve featured the MidCap SPDR (MDY) below since it has formed such a nice looking hammer on the weekly chart, after completing a typical ABC correction.
It’s not a bad time to be bullish, I think, and these are the kind of stocks I’ve been putting money in of late. You gotta buy ‘em (great businesses) when they ain’t (at bargain prices).
Cat: | Time: 1:27 pm (utc+8)
June 18th, 2006 at 10:11 pm
awesome
June 18th, 2006 at 10:40 pm
Maoxian:
Could you explain how you configured the ISE sentiment index subchart? I logged onto the ISE site and the sentiment reading was 77. Your chart shows it stood at a little above 1.
Thanks in advance,
R.
June 19th, 2006 at 12:48 am
The problem with this plan is that the sentiment may be bad on the midcaps but the big caps are still supported by positive sentiment. Almost all those stocks you mentioned have short interest under 3 days.
June 19th, 2006 at 8:37 am
R Mac: I just invert their “call/put” ratio to make it into a put/call ratio. (I’m an old dog who is used to looking at put/call ratios.)
June 19th, 2006 at 8:39 am
bjk: The sentiment is bad across the entire market; I just featured the MDY chart because it drew such a nice hammer on the weekly chart.
June 19th, 2006 at 11:13 am
Hammer on the SPX weekly also.
June 19th, 2006 at 11:15 am
Read today’s Barron’s mid-year roundtable discussion of top money managers. What a confused bunch, no better than the average avid market watcher. It was interesting to note that the majority are bearish, but Fred Hickey the guy who is almost always bearish and has been wrong the past many years, still stickes to his bearish guns, and thinks a major flush down still to happen, then he will become ST bullish. What are prospects that overall Asian economies will slow down and thus earnings of many companies will come down and thus their stock prices ?
June 19th, 2006 at 11:21 am
Bill Cara is still very bearish also.
June 19th, 2006 at 12:41 pm
tandav: I did read it. I don’t call it the roundtable, I call it the “talk your book” table. I was a little disgusted by all the Bernanke bashing. Meryl Witmer continues to be the most useful panelist.
June 19th, 2006 at 12:42 pm
BC: Is he a contrary indicator?
June 19th, 2006 at 1:25 pm
CM: Pretty much, lol.. but we’ll see soon enough.
I lost respect for Cara after the incessant chest beating when he happens to be right about a call. You’d think someone with his career and accomplishments would have more self-confidence and class.
June 19th, 2006 at 2:08 pm
Babak: It doesn’t take many “ka-chings!” to lose me as a reader.
June 19th, 2006 at 8:55 pm
Excellent post, MaoXian. One of the conditions I look for in a bottoming is a drying up of the number of stocks making new short-term lows. We saw 3146 operating company stocks make 20-day lows on 6/13; pullbacks from here that are accompanied by fewer new lows will be interesting candidates for purchase. (Note: after Friday’s decline, only 533 stocks made new 20-day lows).
June 19th, 2006 at 9:19 pm
[…] I wrote about all of the volume that was thrown around last week. This, combined with the bearish sentiment, would make me bullish on a break over last week’s highs. The following alpha stocks are opening up: […]
June 19th, 2006 at 11:31 pm
MaoXian, I think you need to put what the vix is doing in context. In March/2003 the markets were transitioning from a bear to bull market. ie a right shoulder of an upsidedown head&shoulder bearish to bullish reversal pattern was forming. Now in 2006, I’m guessing the markets are transitioning from bull to bear market and October will be the month, long term support trendlines get broken.
How many rate hikes by the fed will it take to create a bear market?
Try putting some fib number bollinger bands on the vix: 13,21,89. 21 is the key one.
September 5th, 2006 at 10:31 am
[…] See also: I’m Thrilled: Sentiment at Worst Levels Since March 2003 Cat: […]
October 23rd, 2006 at 2:35 pm
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