Posts filed under “Contrary Indicators”

Sell Side Consensus Indicator Still Extremely Bearish

Click to enlarge

Source Merrill Lynch

 

 

I’ve shown this chart several times over the past year, but its worth repeating: The Street remains very bearish by historical standards.

Note this is not at all a short term indicator; and does operate with a bit of a lag.

 

 
Previously:
Strategists Most Bearish on Equities since 1985 (August 1st, 2012)

Source:
Equity sentiment ticks up in March
Savita Subramanian, Dan Suzuki, Alex Makedon, Jill Carey
Merrill Lynch, April 1, 2013

Category: Contrary Indicators, Sentiment

Rug to be pulled out from under the short bonds trade ?

In certain aggressive managed accounts, we have been nibbling on some TBT, the inverse 20 year treasury ETF. Data such as the AAII Asset Allocation Survey show investors are very overweight bonds relative to their 27 year mean.  Additionally, the multi-decade drop in interest rates suggests we are likely at a secular low, and ready to…Read More

Category: Contrary Indicators, Fixed Income/Interest Rates, Think Tank

How Cheap Are Equities ?


Source: Société Générale

 

 

To answer that question, look at the chart above, courtesy of Société Générale’s Albert Edwards, who asks the question “Are equities really “unambiguously cheap”?“. (Cyclical Earnings charts after the jump).

Shiller’s CAPE chart shows that while US equities are fairly reasonably priced, they are not, to use Edwards term, ““unambiguously cheap”.” But for about a week in March of 2009, they were, but if you blinked you may have missed it.

Europe, on the other hand, appears to be appreciably cheaper than US equities. (Funny how recessions tend to do that). We have about a 16% European weighting, primarily through ETFs like GAL and DVYE.

Regardless, contrarians may wish to take note of this from a valuation perspective.

 

 

Source:
Are equities really “unambiguously cheap”?
Albert Edwards, Global Strategy Weekly
Société Générale, February 14, 2013

 

Read More

Category: Contrary Indicators, Earnings, Investing, Valuation

Economists: Don’t Buy Bonds (so you should buy bonds)

click for larger table Source: Bianco Research   Fancy yourself a contrarian? The crowd hates bonds. How about you . . .  ?   ~~~~   UPDATE February 6, 2013 8:11pm I am not suggesting backing up the truck with 10 years, I was trying to make a snarky point about crowd opinion.  I guess…Read More

Category: Contrary Indicators, Fixed Income/Interest Rates

Wall St. Feeling Better but Far from Bullish

  I have shown this graphic repeatedly in the past, but given today’s rally, we might as well trot it out one more time: The Sell Side Indicator — Merrill’s measure of Wall Street’s bullishness on stocks — rose by 2.8pt in January to 49.8. This is now an eight month high and the fifth…Read More

Category: Analysts, Contrary Indicators, Investing, Psychology

Uh-Oh: NYT’s Front Page Cover Indicator

“Americans seem to be falling in love with stocks again.”   That is the first sentence of a front page NYTimes article, titled As Worries Ebb, Small Investors Propel Markets. The rest of the article is just as bullish: “Millions of people all but abandoned the market after the 2008 financial crisis, but now individual…Read More

Category: Contrary Indicators, Investing, Psychology

S&P500 vs 3 Month Lows; 90% Up Days

Interesting data point from Jason Goephert, Sentiment Trader: There have been 9 other times the S&P 500 tracking fund, SPY, hit a three-month low, then the next day opened for trading at least +0.5% above the previous day’s high and closed at least +0.5% above the open.  7 of the 9 led to gains over…Read More

Category: Contrary Indicators, Markets, Technical Analysis

Are FINRA Arbitration Filings a Contrary Indicator?

Warning! Finra Arbitration Filings Down, S&P 500 Up     Jack Duval of Original forensic analysis + visualization points out the inverse correlation between FINRA arbitrations and market peaks: “[Above] is a visualization of annual Finra Arbitration Filings as compared to the S&P 500 annual closing value. Since 1999, there is a significant negative correlation…Read More

Category: Contrary Indicators, Legal

Ritholtz’s Rules of Investing (part I)

Each year on the Big Picture, the blog I call home, I update my top trading rules and aphorisms. It’s a collection I have gathered over the years of my favorite trader, analyst, economist and investor viewpoints on what — and what not — to do when it comes to investing in the capital markets….Read More

Category: Apprenticed Investor, Contrary Indicators, Psychology

Fidelity’s Bond Funds Now Larger Than Equity Offerings

Way back in the Summer of 2003, I wrote a report that analyzed the Contrary Indicators 2000 – 2003 Bear market. It consisted of both internal and external signals that strongly suggested that the 2000 crash was over, and it was safe to get back into equities. The second of the external signals was that…Read More

Category: Contrary Indicators, Investing, Psychology