One of the refrains we have heard lately is that “Everyone is too bullish.”

Looking at the data, we find that the sentiment is decidely mixed — perhaps the best word is Neutral.

Consider the various data points:

•  Investor Intelligence Newsletter Survey has Bulls 40.4 v Bears 31.5 — this is the lowest level for the bears since June 2008.  (See chart below).  Overall, this is in neutral territory.  It is neither excessively bullish (see October 2007) or excessively Bearish (see October 2008).

•  The % of NYSE Stocks above their 200-Day Moving Averages was deeply oversold at just 1% in March — its now just under 40%.

Consumer Confidence has been extremely low, and is now moving off of those levels;

Earnings expectations have also been quite low — possibly too low. For the first time since the bear market began, earnings on the SPX are beating consensus;

Money Market Cash as a percentage of total Market Value peaked in March at ~44%; Its down to 38% as of the end of April, significantly above historic levels;

Cash in individual investor portfolios remains significantly above the 21.5 year mean of 25%; Its down from 44%, but remains elevated at 34%;

There are two pieces of anecdotal data worth sharing:

First, we have heard that Individual Investor trading volumes are much higher, while Institutional Traders are unchanged. This is consistent with the so called “Junk stocks” leading the rally off of the March lows.  A variety of single digit midgets (C, AIG, ABK, BAC, FNM, etc.) are all appreciably higher. That implies this is a speculative, flyer led rally.

Secondly, there is a WSJ article today: Brokers Abandon Wall Street:

“The number of brokers bolting from Wall Street is on the rise amid slumping markets and diminishing fees — a trend that could augur lasting changes in the way individuals invest.

In April, more than 2,800 people registered as brokers in the U.S. left the industry, according to the Financial Industry Regulatory Authority. The total number of departures so far this year stands at 11,600. In 2002, the previous high-water mark for industry exits in the 15 years of data available from Finra, a total of 11,500 brokers left Wall Street.

The bottom line: Sentiment data is off of the extreme levels we saw at the lows in March; however, it has not yet reached levels that are associated with excessive bullishness.

Fascinating stuff . . .



Category: Earnings, Markets, Psychology

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.

146 Responses to “Sentiment Reading: Neutral”

  1. Mannwich says:

    @leftback: I realize it’s probably some of that but is it possible that some of it could be something else as well?

  2. DL says:

    Bruce N Tennessee @ 4:01

    “We don’t have the best educated workforce in the world”.

    Maybe so. But when it comes to scheisters coming up with opaque financial products, we are second to none.

  3. DL says:

    AmenRa @ 4:12

    “Fundamental analysis is good for the long term investor”

    What’s the “long term”, and what were “fundamental analysis” investors recommending back in March of 2000…?

  4. danm says:

    “We don’t have the best educated workforce in the world”.
    Education is overated when your economy is based on retail and trash collection.

  5. Onlooker from Troy says:

    Isn’t the general consensus becoming that the end of day ramp ups or dumps are due to the rebalancing of the leveraged ETFs? And the increase in that since the fall meltdown is due to the increased number and volume of the triples. Just imagine if they allow 90+ more leveraged ETFs on the market. That would be insane volatility.

  6. franklin411 says:

    It’s a myth that Japanese manufacturers out-competed American industry. Japanese industry was heavily subsidized by the government via special tax treatment, R+D grants, zero interest loans, high tariffs on American imports, and outright subsidies.

    It’s true that we’ve been losing the education edge since Reagan undermined Americanism. In fact, that’s my point: We became the world’s most dynamic economy because of the massive investment in education after WWII. Under Reagan, we dramatically cut education spending even as the rest of the world began surging past us.

    Why don’t you answer your own question? How do we regain our competitive advantage?

    The conservative argument is that we accomplish that by cutting taxes and stimulating the creation of more supply. Does anyone think that will work? Are we in economic trouble right now because there isn’t enough supply? And even accepting that ridiculous concept called supply side economics, how will doing the same thing we’ve been doing since 1980 (cutting taxes on corporations and the rich) change anything? Won’t it simply perpetuate the failed economy we have now?

  7. Onlooker from Troy says:


    The good fundamental investors were scared to death and in cash. I’ll give you Dr. John Hussman as a good example. Of course he doesn’t use purely fundamentals, but a mix with his proprietary market climate model. Pretty good record too.

    I think what’s meant is that in the end, and over the long term, fundamentals do matter. By the end of the secular bear that will be well proven. Just because they aren’t paid attention to by the majority of investors doesn’t mean their not valid. Clearly most of the fundamental investors in 2000 had deluded themselves about what the fundies were, and what they were really telling them.

  8. ben22 says:


    thanks for the link. I’m looking forward to reading that tonight. I really like to watch him be interviewed. He’s very calming.

  9. DL says:

    Onlooker @ 4:26

    Was Hussman actually recommending an 80%+ cash position…?


    Most technical analysts would agree that fundamentals eventually matter over the long term.

  10. franklin411 says:

    Why do we have to have an economy based on trash collection and retail? Nobody will ever convince me that there’s some mystical, invisible hand that determines our futures. We make our own futures, and every good or bad outcome we’ve seen over the last 30 years is attributable to decisions made by consumers and policymakers sometime in the past.

    Education matters if, and only if, people truly believe that we have to change from a consumption to a production economy. Not overnight–you don’t reverse 30 year trends overnight. But it has to start somewhere. It has to start now.

  11. Onlooker from Troy says:


    Interesting coincidence of reaching those “break even” resistance levels and the stress test date finally coming (sell the news; even though it’s been leaking out already).

  12. DL says:

    franklin411 @ 4:29

    What are you proposing to produce that isn’t already being produced here in significant quantity?

  13. Onlooker from Troy says:


    Hussman was fully invested but tightly hedged; so effectively cash plus what he got by outperforming the indexes. You can go back and read his stuff on his web site to see what he was thinking at the time and his performance.

    He was bearish on valuations all the way from 2000 through this bear based on long term return projections, similar to Jeremy Grantham.

  14. leftback says:

    @ hope: I agree. In this market, risk can arrive at any time of the day or night. In fact, I really like buying into the close because it eliminates that one little variable of short covering. So I’m just playing the percentages as I see them. In addition, the size of the stakes I play when I try to catch a turn are very carefully calibrated relative to my other positions, and I am sitting on piles of cash, 2-year notes and TIPS. If it goes well, I can add to it.

    There is a limit to the extent of market manipulation that can be done – all cynicism apart – in the face of seriously declining fundamentals. Eventually the fundamentals will reassert themselves. Who knows, the SRS knife may be laying on the table now – I may have just picked it up by the handle! I am still quite enamored of the downside possibilities of our beloved CRE industry, and I know that DL and Mike in NOLa agree with me.

    Did anyone else see how steady the Treasury market was today? That’s telling you something. Big Ben has to take turns protecting different asset classes, or China and PIMCO are going to be pissed. Now that they have suckered poor old Johnny Retail into the XLF again they can turn their attention to the important market.

  15. DL says:

    Onlooker @ 4:35

    I do read some of his stuff, and I have a favorable opinion of his writings. But I don’t know what his track record is in actual practice.

  16. franklin411 says:

    Clearly, technology. Let China produce shovels and TVs. We’ll produce hyper-efficient electronics and machinery, renewable energy production processes that eliminate our need to enrich foreign petro-regimes that hate our guts but take our money, medical technology that saves lives, etc. In fact, my university is doing research in nanotechnology that could revolutionize everyone’s lives. Think about it: materials that heal themselves when scratched, plastics that return to their original shape when dented, microscopic machines that are injected into the bloodstream to find and destroy cancer cells. These are not pipe dreams: these are being actively researched at my university, and we need to invest in these now to profit (handsomely) in the future.

  17. DL says:

    leftback @ 4:35

    If I were a daytrader, I might buy some FAZ at the close, then try to unload it the next morning.
    (But I have a longer time frame).

    This time, I’m going to wait for the “whites of the bear’s eyes” before buying any FAZ.

  18. hopeImwrong says:

    LB – Hope you do catch the handle.

    As far as manipulation, I don’t believe it is a coordinated, or as long term as others seem to think. I also think gov’t intervention may be the least of it. But, I think market makers, and big boys (like GS), can and do jerk the market around for trading profits, and in this environment (low volume, futures looming big every day, options orders “wagging the dog,” it is a risk factor, especially for the short term trader. For the long term, manipulation mean nothing unless it creates a bubble, and I’m not sure “price manipulation” can create a bubble.

    I also am looking for an implosion in CRE. But, the timing of this is important. The longer the market holds up, the more gentle the implosion may be. Possibly the REITS can conserve cash (pay dividends in stock), and refinance their debt (seems unlikely, but if sentiment moves far enough), or maybe the Chinese want to convert their dollars into hard assets before they are devalued and will start buying distressed CRE? I don’t know. These are just risks to the trade. I think the USG is stretched too far to step in, but Jeez, I never thought they would stretch this far.

    Good catch on the treasury market. Thanks.

  19. DL says:

    franklin411 @ 4:40

    I’m all for producing what you’ve listed. But my question would be, what government policies (if any) are you advocating to increase this production (as well as the underlying R&D)…?

    There are a number of issues here. But I just want to focus on one at the moment, which is the tax laws. I’m not an expert on this subject, but from what I’ve read, the tax laws encourage semiconductor manufacture in other countries. The R&D is done here, thereby generating a tax deduction, then the actual manufacture is done in a lower tax country.
    I’m not arguing that it’s all about taxes; there is far more to it than that. But I’m just throwing that out as one of many issues.

  20. lb,

    see: “Taiwan Stock Exchange (TWSE) chairman Schive Chi (薛琦) said on Sunday that the cross-listing of exchange-traded funds (ETFs) on stock exchanges in Taiwan, China and Hong Kong would take place soon, the Chinese-language Economic Daily News reported yesterday.

    Schive, one of the Taiwanese delegates attending the Boao Forum for Asia annual conference held in Hainan Province, China, from last Friday to Sunday, said that collaboration between capital markets in Taiwan, China and Hong Kong would involve three steps.”

    coupled w/ a few other things, we may have traded Taiwan for some extra leeway in the USTreas complex…

    this thing: looks ugly

  21. franklin,

    see: “History of the PetroDollar

    The petrodollar is an interesting historical, economic, phenomena not likely to ever be repeated.
    A petrodollar (a term coined in 1973) is an American dollar earned by a foreign nation from the sale of its own oil.

    The significance of the petrodollar revolves around the concept of “what is money?”

    Money is any marketable good or token used by a society as a store of value, a medium of exchange, and a unit of account. Since the needs arise naturally, societies organically create a money object when none exists.
    Through almost all of human history, and through all of American history until 1971, money was based on a precious metal. In other words, if someone asked you what a dollar was your answer would be “1/44th of an ounce of gold”.
    You see, before 1971 money wasn’t a piece of paper that only held value because the government said it did. Paper money was something backed by a tangible asset. It’s the gold (or silver) backing that gave the paper money its value (and after WWII America held 80% of the gold in the world). If it wasn’t for some sort of commodity backing America’s paper dollars wouldn’t have any more real value than Weimar Reichmarchs…”
    from a source, franklin, you’re familiar with

    LSS: if we weren’t net Importers of Oil&Gas, there wouldn’t be a Petrodollar, to begin with..

    we have no shortage of either Oil or Gas, just a shortage of American Leadership..

  22. franklin411 says:

    There are two main changes I would advocate. On the private level, parents need to play a more active role in educating their children. We teach our kids, in a myriad of ways, that education is the least important thing in their lives, and if they fail it’s because someone failed them. We need to raise kids to take education seriously and to take responsibility for their failures as well as their successes. Personal responsibility, in other words.

    On the government level, massive reinvestment in our educational infrastructure. Here in CA we’re raising tuition 10% again this year–over the last 8 years, tuition has increased > 110%, much faster than inflation. This is coming at a time when the state predicts that we’ll have 1 million fewer college grads than we need to sustain our current workforce by 2025 unless something changes. K-12 is worse off, as kids get even less attention than they have in recent memory. We need government sponsored basic research. It’s not hard to get Apple to spend money on developing an iPhone, but Apple is not going to spend money to research the basic physics that eventually–over decades–becomes applied science. We need to spend money on existing as well as future energy efficiency technology, because every dollar sent to the Middle East for oil is a threat to our national security. We need to address health care, because our current system is the world’s most expensive and least efficient use of capital.

    In short, we need policy that attacks the economic problem from the perspective of a homeowner (we’re going to be living here for 30 years, so let’s fix things right) instead of the perspective of a renter (I’m out of this dump as soon as I get rich, so slap a coat of paint on it).

  23. AmenRa says:


    For me long term is any trade that lasts for a year or longer. Fundamental analysis tells me if the company is in decent enough shape to last that long. FA also told everyone that some banks didn’t need that large of a loss to wipe out all of their capital. I’ll admit that they have been masterful in keeping that fact at bay.

  24. leftback says:

    franklin: Now yer talking. More physics and math and less marketing classes. Remember Isaac Newton taught us that what goes up must come down. Works in economics too, especially with bubbles…

    I have hope for you, young man, there are signs of maturity there. BTW, many universities are a complete economic disaster in and of themselves that hardly anyone has talked about. If they were banks they would need TARP.

  25. Transor Z says:

    we may have traded Taiwan for some extra leeway in the USTreas complex.

    Had that same thought just the other day but I’m glad you were the first crackpot to put it out there. ;)

    The “few other things” would probably include dibs on oil.

  26. ssrforecast says:

    A new technology has identified the next wall street crash: it will be around may-june 2010!!!

  27. that’s twice Newton was mentioned today:

    catch this: “Competing theories of gravitation have already been developed which are independent of this construction. Their only problem is that they conflict with Newton’s theory of gravitation. “Maybe Newton was indeed wrong”, declares Professor Dr. Pavel Kroupa of Bonn University´s Argelander-Institut für Astronomie (AIfA). “Although his theory does, in fact, describe the everyday effects of gravity on Earth, things we can see and measure, it is conceivable that we have completely failed to comprehend the actual physics underlying the force of gravity”.

    This is a problematical hypothesis that has nevertheless gained increasing ground in recent years, especially in Europe. Two new studies could well lend further support to it. In these studies, Professor Kroupa and his former colleague Dr. Manuel Metz, working in collaboration with Professor Dr. Gerhard Hensler and Dr. Christian Theis from the University of Vienna, and Dr. Helmut Jerjen from the Australian National University, Canberra, have examined so-called “satellite galaxies”. This term is used for dwarf galaxy companions of the Milky Way, some of which contain only a few thousand stars. According to the best cosmological models, they exist presumably in hundreds around most of the major galaxies. Up to now, however, only 30 such satellites have been observed around the Milky Way, a discrepancy in numbers which is commonly attributed to the fact that the light emitted from the majority of satellite galaxies is so faint they remain invisible…”

  28. Transor Z says:

    The death of private sector R&D in the basic sciences — as opposed to only in short-term focused applied sciences — is another truly sad casualty of the way corporations have evolved in the last 20+ years.

  29. Transor,

    this: “The “few other things” would probably include dibs on oil.” wasn’t what I was referring to.

    I meant “Political” announcements that add weight to the “Trade” thesis..

    Taiwan is a big Plum for a + they produce mucho ‘High-Tech’

    ‘Caines are going to turn around, one of these days, and find out that PROC ain’t in the ‘cheap exports’ biz anymore..and we’ll be paying England x2 prices for our ‘disposable electronics’..

  30. Transor,

    do me a favor, if you were trying to destroy a Country, wouldn’t you do what we’ve seen done, here in the US, over the last ~35 years?

  31. CNBC Sucks says:

    Hoffer: I get your gas supply argument, and maybe even an unconventional oil argument, but where is your conventional oil?

    franklin: You have been taking those CNSI brochures too seriously, and China is in the process of overtaking the U.S. in PhD engineers and scientists. The “we will produce high value” justification for globalization with Western workers was discredited in, say, 2005.

  32. Onlooker from Troy says:

    DL Says:
    May 6th, 2009 at 4:40 pm

    Onlooker @ 4:35

    I do read some of his stuff, and I have a favorable opinion of his writings. But I don’t know what his track record is in actual practice.<<<<<<<<

    Here’s a link to a performance graph. You can see that he really outperformed during the ’00-’02 bear by being hedged and not being in tech. He lagged a bit ’07 I believe, due to the outperformance of low quality junk that he abhors.

  33. Transor Z says:


    Good question and deserves a more thoughtful answer than I can give now. Give me a bit.

  34. CNBC S,

    Oil: Alaska, not ANWR, Prudhoe Bay still gushes oil under artesian pressure, and PB is, but, one field, of the known reserves on the North Slope, as well there TCF of NatGas up there, as well.

    also, OCS=outer continental shelf, the majority of which has been OOB for so long that it hasn’t been explored by OilCo.’s..but, NASA and the USGS know where it is–it was their charts that Congress was using during the “Drill, Baby, Drill!” days..

    OOB=out of bounds

    plus, we waste so much energy, and waste so much waste that can be energy(Carbohydrates) it isn’t even pleasant to think about..and on like that..this whole Pachinko Parlor has been geared to maximum Consumption value..

  35. CNBC Sucks says:

    Hoffer, that is a creditable answer. I won’t debate characterization of OCS deepwater as conventional because that would be splitting hairs. I will, however, make the qualification that “lots” of oil does not necessarily mean “sufficient” oil, considering your other point that we waste so much of it.

    By the way, re: centiare’s comment, I don’t think the UST will print $25T “to make a dent in the debt-deflation cycle”, but could print $10+ trillion for Geithner’s PPIP plan. Steve Keen is Australian and gets a pass for his lack of understanding, but the US government’s priorities are to save Wall Street first and reflate consumption a distant second. US asset markets balloon anyway on the APPEARANCE of renewed consumption, not its actuality. And paying the national debt is just a “nice to have”.

  36. CNBC S ,

    on the conv. Oil side, I forgot the Bakken Oil Formation, for one..

    the stuff, really, is all over..we could run the whole Economy on NatGas and Hemp/Soy( for add’l petrochem-feedstock based products)

    you should look into it, We’re being lied to, continuously..

  37. usphoenix says:

    @feanklin: congratulations. You are starting to fit in.

  38. CNBC Sucks says:

    Mark – oil is not natural gas, and to convert our primary transportation fuel source from one to the other would require a significant investment, say $10 trillion public and private. Of course, that investment would be a fraction of what the government is squandering on saving Wall Street losers, but I digress.

  39. CNBC S,

    yes, would require Investment, even developing the Oil Fields would, as well.

    the point is, between Conservation and Carbohydrates, we could forestall some/much of the impact during development/switch over..

    electric cars y ‘Smart Grids’ are a complete, and utter, boondoggle that is nothing more than the uber-backbone-’Smart Grids’-of the pervasive surveillance state..
    see some of this stuff: FIGURE 2. Developed for cargo-tracking applications, GPSit is a device that gathers GPS location and other critical information and sends it wirelessly to a remote tracking station (left). The second-generation device, which will appear to an intruder as a bumper sticker or label (right), is envisioned as a 1/4-in.-thick miniature surveillance camera with integrated optics and sensor that can operate for 60 days on one battery and gather images within a 60° field of view. (Courtesy of GPSit)
    But a lesser-known option for covert tracking is a new imaging technology called GPSit from the company with the same name, GPSit (San Diego, CA). GPSit is currently a 1/2-in.-thick package that sends GPS data to a remote terminal for cargo-tracking applications (see Fig. 2). By the Q3 2009, GPSit says the device–reduced to 1/4 in. thick–will house a miniature camera, imaging sensors, and electronics packed together in a super-thin flexible plastic embedded within “Tough Skin.”

    everything that moves, and doesn’t, is fixin’ to be tagged
    see: NAIS, for a different facet, and, a contra view

  40. [...] the Big Picture blog (here for full [...]

  41. usphoenix says:

    @franklin: If you think technology is the US advantage over China you better think again.

    Where is the iPod manufactured?

    Do you have some kind of concept the Chinese are going to continue to be our stupid manufacturing partners?

    The Chinese are picking our brains and starting to compete quite successfully. Huawei. There probably is an American company behind them (most likely Cisco, and behind them Motorola) but we’ll never know for sure will we.

    If you think our game addicted young are going to compete against “want to eat” youth guess again.

  42. bman says:

    I think Franklin should run for office.

  43. [...] before the window shuts down.  It has been a blast and a learning experience.  I have written many goodbyes, but my final words on this blog will always be BIG TITTY [...]

  44. [...] Barry Ritholtz, The Big Picture, May 6, [...]

  45. [...] As we noted last week, Sentiment was pretty neutral as the market tore higher (Sentiment Reading: Neutral). [...]