Posts filed under “Contrary Indicators”
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 time in six months that the indicator has improved after hitting all-time lows in July at 43.9.
The S&P 500 has risen 10% in the six months since sentiment bottomed. Historical returns are typically up 24% and 46% in the 12 and 24 months that follow such as bottom. following.
Bank of America/ Merrill Lynch
Sell Side Indicator, February 1, 2013
“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
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
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
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
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
The only major global equity index which we monitor — and it is a big one – that is down for the year is the Shanghai Composite. The chart looks ugly and ready to break to new lows after its post crash peak of 3,477, way back in August 2009. The Shanghai is down 39.2…Read More
Yesterday in the office, we were discussing when to take a little something off of the table. This upthrust has been very strong (itself a positive), but we tend to be wary when rallies are seemingly built on rumors. The 19th trial balloon of some new ECB intervention should not trump slowing fundamentals and peaking…Read More
So I am still catching up with some of the more interesting reads from while I was away, and this THIS damned cover made me fall off my chair: Source: Barron’s A few words about this: The classic magazine cover contrary indicator is a non-business press issue. This is because by the time…Read More