Posts filed under “Contrary Indicators”

World's Biggest ETF/Contrarian Indicator: GLD > SPY

GLD was briefly the world’s biggest exchange-traded fund. In August 2011, GLD had assets of more than $77 billion, surpassing SPY (SPDR S&P 500 ETF) for a short time. The SPDR Gold Trust’s market capitalization rose to $76.7 billion  — gold briefly topped $1,880/ounce. At the same time, SPY’s “capitalization” was ~$74.4 billion.

I missed this detail in real time (I caught the Bond version in 2003). With the benefit of hindsight, its easy to say this was a contrarian signal. Not that you should short GLD, although that surely was a wonderful trade. But rather, that SPY was attractive, as this was a sign of extreme dislike for equities.

Have a look at the SPY chart and GLD (and Apple as well). click charts to enlarge them


SPY Weekly Chart 2008-2013


GLD Weekly Chart 2008-2013


And for a little comparison, here is Apple — GLD looks somewhat similar . . .


AAPL Weekly Chart 2008-2013

Category: Contrary Indicators, ETFs, Gold & Precious Metals, Technical Analysis

Putting Investor Bearish Sentiment into Context

Individual Investors Are Not Buying It Click to enlarge   Lots of people have been discussing how negative investor sentiment is, showing the chart above. It shows markets making new all time highs as expectations that markets will be higher six months hence is at a mere 19% of AAII respondents. (See Individual Investors Are An…Read More

Category: Contrary Indicators, Investing, Quantitative, Sentiment

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…Read More

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.



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