Since the market peaked in October 2007, I have pointed out (repeatedly) when TBP traffic soared in response to the credit crisis. Each time, we noted this was a good contrary indicator, and used it as a good short term buy signal for a trade.

And after each short term rally, the public angst was proven correct, and lower lows were had.

This month, I could not help but notice the opposite — that traffic dropped substantially,- from over 2.5 million page views in March to just over 2 million in April.

Not coincidentally, we had a rip roaring rally over the same period of time (during which we were suitably bullish). As the economy’s free fall slowed (improving 2nd derivative), the traffic slipped.

Whether it was the stimulus or the Fed funded parachutes opening, people searched less for news on the crisis. I presume this is a function of psychology — investors are less nervous, spend less time flailing about for answers, and revert back somewhat towards their old media consumption habits. AKA Complacent.

I contacted a dozen other bloggers, and nearly all were experiencing the same traffic slide. (Even the exception said their traffic was mostly due to a new Twitter related project).

Which leads to the obvious question: From a sentiment perspective, does this have any meaning? We did well using the oversold/high traffic spikes as a long side entry point — at least for a trade. Does this mean we can use the overbought, traffic drop off as a sell signal?

We clearly do not have enough data to draw a firm conclusion. However, if the pattern holds, we should see a short term pullback (not a wild conjecture given how far this market has run in so short a period), followed by higher highs.

The psychology has clearly shifted. But so too has the risk/reward calculus.

>

Previously:
Blog Traffic as a Contrary Market Indicator (February 4th, 2008)

http://www.ritholtz.com/blog/2008/02/blog-traffic-as-a-contrary-market-indicator/

Traffic Peaked Again Near Short Term Bottom (July 18th, 2008)

http://www.ritholtz.com/blog/2008/07/traffic-peaked-again-near-short-term-bottom/

Crazy Fannie/Freddie Traffic Spike! (September 8th, 2008)

http://www.ritholtz.com/blog/2008/09/crazy-fanniefreddie-traffic-spike/

Category: Contrary Indicators, Markets, Psychology, Web/Tech

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

134 Responses to “Blog Traffic Reading: Complacent!”

  1. Onlooker from Troy says:

    Ahhh! I feel better now. Doug Kass is calling for caution and moving into short positions. I feel somewhat validated now. :)

    http://www.thestreet.com/story/10494537/3/kass-risks-associated-with-second-derivative-rally.html

    I hope his contrarian antenna are still as finely tuned as they were at the March bottom. Of course the next dilemma will be whether to and when to buy that dip/drop. Hmmm.

  2. dead hobo says:

    I just had a stray thought. If the hedgies that Obama dissed over Chrysler so badly have hedged their debt using CDS, and if AIG holds the other side of the CDS, directly or indirectly, then won’t Uncle Stupid ultimately pay off at 100%? If so, Uncle Stupid got snookered again.

  3. Mannwich says:

    @dead hobo: I think the answer to your question is “yes”. AIG is the fraud, I mean, gift, that keeps on giving.

  4. gfeirman says:

    Absolutely. But why “higher highs” after a short term pullback????

  5. Mannwich says:

    @MRegan: Cramer just recommended buying F. I’d sell it and take profits if I were you.

  6. Bruce N Tennessee says:

    President Barack Obama said in a midday announcement. “This is not a sign of weakness but rather one more step on a clearly chartered path to Chrysler’s revival.”

    Er, aren’t there some firms, when entering this clearly chartered path, that don’t emerge from bankruptcy? Would that be even more a “not sign of weakness”?

    Funny, up until today, I sorta thought of bankruptcy, if not a sign of weakness, at least a sign you were kinda puny….who knew??????

  7. karen says:

    Jeff, i think MRegan did sell, made 100%. That’s how I interpret it anyway. My internet continues to torture me today.. goes on the blink when the market falls.. so convenient. Looks like I missed an ERX buying opportunity. And, I’d love to get SRS under 20… maybe later this week?

  8. Mannwich says:

    @karen: I think you’re right. Just wanted to provide the Cramer call in case he didn’t.

    I’m liquidating my remaining longs into this strength to set up a big move into SRS. The question is when to dive in?

  9. MRegan says:

    Ah the ole’ Cramer timer. That means my bacon is done. Don’t want it burnt to a crisp, do I?

    Kummerspeck. What I am trying to say, I recommend caution, cuz grief bacon makes for a sad meal.

  10. MRegan says:

    Man! Faz is making me spazz! What is with that ETF? It’s as if it were designed to only go down. ahem…
    moving on. When I look at it, I get the image of new shorts chasing out the old shorts. That is, ole Mr. Market likes some shorts better than others. How will we know when he’s done tossing out the old pairs? Well, you should always have at least a week’s supply on hand.

    So, maybe FAZ will get down to 7.50-7.60 range (again)- might be worth trying top sneak in with the new crop of tighty whiteys (I’m talking to you, Conneticutt). DYOD and be nice to your mom.

  11. Outlier says:

    There looks to be an inherent decay to most leveraged RTFs bull or bear. FAZ & FAS for instance are _both_ showing negative returns over a 3month period…

  12. Mike in Nola says:

    I think all the panicking bears should remember what the Hugh Hendry said a few days ago.

    http://www.cnbc.com/id/30447441

    Even after the big crash of October 1929, the DJ started recovering in mid-November 1929 and regained 50% of it’s losses before rolling over and heading back down. That lasted about six months and was the mother of all bear traps. I would not be shocked to see the S&P get back up to 1000.

    I was expecting something like that last year, but was way early, my guess is because the massive loosening of monetary policy and the bailouts delayed it. However, the massive amounts of debt that will have to be liquidated are really beyond the limits of the various governments to deal with. They can distort market cycles, but they cannot defeat them. The economic forces are just too big.

  13. MRegan says:

    You see it too. Hmm…Some possibilities:
    a) I am not crazy
    b) You are crazy too
    c) Neither are crazy and the Man is effing w/us
    d) You are the Man and you’re effing with me
    e) FAZ will hit 11.30 by Wednesday of next week
    f) All of the above

  14. Bruce N Tennessee says:

    I think Bill Gross should rename some of the Pimco funds…for instance Pimco high yield fund A:

    http://www.allianzinvestors.com/mutualFunds/profile/PMHY/performance_A.jsp

    Over the last 10 years…2.28% annually..

    Over the last 5…don’t ask.

    And if we are now ignoring treasuries..hmmmmm….

  15. Andy T says:

    Been very busy this week. I got a chance to make a few technical comments on Barry’s Monday night open thread. I said then that the market didn’t look like it wanted to rollover, that in the very short term we could grind higher to 900, but that long term holders really need to be selling into it.

    Market put up a fairly ugly candlestick…”shooting star” type. It looks bearish, but wish it had a longer shadow overhead (trapping more longs). In terms of the wave count up from the 667 lows, it’s becoming “clearer.” The whole shape now looks like a five wave type pattern, with a “first wave extension” (meaning the very first move up off the lows will be the longest wave.) The move from 3/30 to 4/17 looks like the third wave. The fourth looks completed on 4/23. Which means….we’re finishing the final fifth wave up now. My short, short term out look suggests one more leg higher that should challenge the 900 level. 867 needed to hold today to holdout hope for that one more leg up. Any break of 850/855 should be considered BAD NEWS for longs.

    The DX still looks like it has more room to go down….so maybe that gives asset classes the artificial push required to make new highs on this advance?

    Gold was seriously repelled into that key 920 level we talked about last week….what inflation?

    The targets for this Wave 5 are 894 (.618*Wave3). Maxim target is 930 (Wave3=1). 906 remains the 23.6% of the Large Wave Three as cited a few weeks ago. So, lots and lots of resistance levels overhead.

    Disclosure. I remain 25% short SP coupled with a DX short.

    Best of Luck “investing” – AT

  16. CNBC Sucks says:

    I think Bill Gross should rename the Federal Reserve “Pimco’s bitch”.

    Happy days are here again…

  17. call me ahab says:

    AT- no more Taboo? Please enlighten us

  18. Whammer says:

    @Outlier and MRegan,

    There is a long-term decay in the leveraged ETFs, at least to the extent that the market doesn’t make any wild moves one way or another. The day to day churn grinds them to dust. There is a pretty reasonable argument for shorting long and short leveraged ETFs simultaneously. It appears that they are getting hard to borrow as a result.

  19. Andy T says:

    call me ahab….sometimes you just have to change it up a bit….

  20. call me ahab says:

    AT-

    nothing wrong with that-

    it appears you are leaning for another push North- however I am inclined to side with the LB top of 888- I find it hard to believe that with the failure of a major car manufacturer will not have a severe dampening effect-

    additionally as it is not altogether certain that Chrysler will survive the BK- possibly some brand names and factories sold off- Chrysler itself having zero value- courts may reasonably opt for liquidation- certainly does not bode well for GM-

    factories shuttered, workers idled, suppliers shut down- that has to kick in to these Pollyanna’s that all is far from well- ominous I say-

    what say ye?

  21. The Cynic says:

    I think that we’re tired of so much negative news. Not as much the stock market but bailouts (no offense to your upcoming book) and rewarding failures with more taxpayer money.
    Government intervention turns many capitalists off, unless they can make money off of it (see Bill Gross for tips)..

  22. leftback says:

    I didn’t really call the Leftback Top™ at 888, but I can go there. I agree with Andy that this could be a sloppy top with a bunch of resistance levels so close together, and the declining volume sort of fits in with that idea. So my kitchen sink is still on the short side for the time being but is tightly stopped.

    Bubba seems to spend a lot of time reading my comments and thinking about me. More time than I do, actually. Sometimes I fear that bubba may be missing the ironic and tongue-in-cheek nature of my acerbic commentary.

    There are clear signs of exhaustion among the posters here. Trying to catch a turn in the market for weeks will do that, and this reminds me a lot of the waiting that went on last spring and last August when many bears jumped the gun trying to get on the short side as we awaited The Hunt for Red October™. Go on, bubba, you can hate on that one if you like. Leftback will remain blithely undisturbed by your monosyllabic critique.

  23. jimcos42 says:

    To address the original question, I just think blog traffic roughly correlates with VIX. No more, no less.

    Wild and crazy markets stir media frenzy, of which blogs are one type. VIX peaked big-time last December at ~80, and then a secondary spike ~53 in February-March. Since then it’s drifted lower. So has media attention.

  24. Andy T says:

    call me ahab – I think there’s a “decent chance” for one more little leg. But make no mistake….I’m very bearish medium/longer term….It’s going to be a long, tough summer. I’m only 25% short …I’m working hard to figure the exact top (even tho’ everyone says you can’t do such things….) so that I can be fully loaded short…

  25. ben22 says:

    AT,

    As bearish as Prechter??

  26. Andy T says:

    karen Says:
    April 30th, 2009 at 10:22 am
    ben22, i actually think today’s low, $880, should hold. But nothing lower than 860 as we sketch out the right shoulder on this giant R H&S. (My real line in the sand is $840, however.)

    Karen, my dear, with all due respect….what are you talking about here? I think I see what your saying, but I’ve never heard of a reverse head and shoulder pattern that occurs near the top of a mega trend….shouldn’t reverse h&s patterns occur at the end of down trends? Maybe i’m not interpreting you correctly….

    I don’t really have an opinion about gold, except that I couldn’t be bullish until it takes out the downtrend from 1000+ highs…

  27. Andy T says:

    ben22- I don’t know what prechter’s count is. I “think” he’s calling this first huge move down only an “initial” Wave 1 down that should be followed by two more moves lower….concluding in 2011 or 2012? I’m not that bearish. In fact, I’m very bullish in several months from now when the fifth wave concludes around 600 ish in Oct/Nov. That stated, I understand what that alternative count is…and I cannot dismiss it….let’s hope that doesn’t happen…If 600 ish can’t hold, then 300-350 zone is the next target. gulp.

  28. karen says:

    Andy, my dear, with all do respect… perhaps you should acquaint yourself with some old gold timers? I’m too young to try and teach an old dog like you new tricks. Try James Turk of goldmoney.com http://goldmoney.com/en/commentary.html

    Oh, and btw, if you want to accuse me of being drunk tonight, you’ll be spot on! : )

  29. MexicaliBlues says:

    R. Prechter was “too bullish” in 1982, now it seems, the opposite?

    AT’s alt count sounds more or less in line with the Grand Supercycle Bear call. Time will tell!

  30. karen says:

    Well, there is no doubt
    that AT can count! : )

  31. ben22 says:

    AT,

    In the latest EWT letter he discusses a DOW below 1,000 but I think is looking for 3800-4k dow this year.

  32. [...] Barry has some observations on his blog traffic. Since the market peaked in October 2007, I have pointed out (repeatedly) when TBP traffic soared in response to the credit crisis. Each time, we noted this was a good contrary indicator, and used it as a good short term buy signal for a trade. [...]

  33. [...] administration appears to have bought itself a jobless recovery.  Page views are down here and at Ritholtz’s.  The outrage over CNBC has dissipated to lameness; CNBC itself has become a dull version of [...]

  34. [...] From Barry Ritzholtz: [...]