March 4, 2007
Market Sentiment — Week Ending March 2, 2007
I wasn’t surprised to read this in Barron’s given last week’s dramatic market break:
[Last week] the American Association of Individual Investors [sentiment survey went] to 39.6% bearish and 36.6% bullish, from 53.9% bullish and 22.3% bearish the previous week.
That is bullish of course. The ISE Sentiment Index (I re-jigger it into a put call ratio) turned bullish with its move above “1″ and the huge spike in the Volatility Index is also bullish. I expect the market will stabilize next week. If I get a chance this week, I’m going to write a little report on the stocks that I think are especially interesting here, which I’ll send out to folks who make a donation. More details later…..
Cat: | Time: 9:07 am (utc+8)
March 5th, 2007 at 1:35 am
Check out odd lot short sales
March 5th, 2007 at 7:12 am
OK - how do we make contributions ?
March 5th, 2007 at 10:00 am
Blake: Interesting, thanks. I think the odd lotters are supposed to be “dumb money.” Yet another reason to be optimistic.
len: I might not have time to write anything but if I do, I’ll write a post with details.
March 5th, 2007 at 4:05 pm
How’s the media sentiment reading? I would guess it’s still complacent..?
March 5th, 2007 at 4:09 pm
Eyal: I’ve been lazy about updating that, so thanks for reminding me and I’ll try to post the chart this week.
March 5th, 2007 at 4:50 pm
good call. however, it might be a bit early. the sentiment is not extreme and it is only the first uptick in this drop. to be cautious, I am covering my shorts
March 5th, 2007 at 5:02 pm
zi: Yeah, it’s probably early but folks should look hard at putting their accumulated cash to work in things that are “cheap.”
March 6th, 2007 at 6:59 am
CM et al,
CBOE put/call ratio climbing higher and higher over 1…bearish sentiment.
Check out the past two weeks worth of data. Here is the link
March 6th, 2007 at 8:17 am
Amir: Remember that a high put call ratio is bullish since the little guys tend to buy puts at bottoms, not tops.
March 6th, 2007 at 9:22 am
CM -
I would agree with you but in this instance it’s the big guys that are pushing this ratio more bullish. The equity line is the generally regarded as the retail crowd and typically has the long sentiment.
If you look at the data pre-China meltdown the sentiment was showing bullish signs by the index options(more institution crowd). Post-meltdown the retail crowd is adding to the put/call ratio > 1 but not as significantly as the institutions.
March 6th, 2007 at 10:16 am
Amir: I’ve actually stopped looking at the CBOE put call ratios (both equity-only and index) since the inclusion of ETF options screwed up the data so much. The institutions usually are using options as a hedge whereas the retail crowd is trying to get rich quick with speculative small-money bets, so yes, the equity-only was (?) one of the best things to look at. I now watch the ISE Sentiment Index very closely instead and it is excellent for judging retail behavior (which is very pessimistic, hence bullish at the moment).
March 10th, 2007 at 4:56 pm
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