Posts filed under “Contrary Indicators”

What Do High Levels of Job Anxiety Signify?

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A recent Gallup poll found 31% of US workers are “worried they could soon be laid off.” That number is “similar to the 31% seen in August 2009 but double the level recorded in August 2008 and for several years prior.”

This could have several interpretive meanings for the markets and economy:

Negative for Economy: The working public sees company activity and sales first hand, and can sense when their employer is in trouble.
Negative for Politicians: The 2007-09 Recession was already in full swing while Politicians were denying (See Mental Recession). The public was much more astute and insightful than much of DC
Positive for Economy: Due to the Recency effect, people’s outlooks are backwards looking, greatly impacted by their most recent experiences. In the present case, the fear is of another credit crisis like event.
Positive for Markets: As a contrary indicator, the public’s fears can work well as an entry signal for trades. The last time job insecurity peaked was mid-2009, not a bad entry for equities.

I have no particular insight which of these are correct — I wanted to lay them out for discussion purposes.

Discuss!

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Source:
In U.S., Worries About Job Cutbacks Return to Record Highs
Three in 10 workers worry they could lose their job, double the level seen in 2008
Lydia Saad
Gallup, August 31, 2011
http://www.gallup.com/poll/149261/Worries-Job-Cutbacks-Return-Record-Highs.aspx

Category: Contrary Indicators, Data Analysis, Employment, Psychology

Diverging ETFs: What Are GLD & SPY Telling Us ?

GLD vs. SPY Relative Price click for larger graphic Source: Solari Report, Yahoo Finance > Here is an interesting observation: The value of the SPDR Gold Trust (GLD) is now worth more than the SPDR S&P 500 (SPY) representing the full index. (This refers to the ETFs and not the underlying value of the SPX…Read More

Category: Contrary Indicators, ETFs, Gold & Precious Metals, Psychology, Trading, Valuation

The Punditry Chronicles

Forecasting is a rough gig that often confounds even those who do it for a living and generally do it well. Situational awareness (see e.g., this and this), on the other hand, is all about knowing “what you need to know not to be surprised,” and having “the ability to maintain a constant, clear mental…Read More

Category: Analysts, Contrary Indicators, Really, really bad calls, Research

Barron’s: Social Networking a Bubble. What Does This Mean?

Bubble Trouble: This week’s Barron’s cover story by Mike Santoli proclaims “Yes, its a bubble.” Before we delve into the article, recognize that 1) This is not your mainstream publication, so it has no validity as a contrary indicator; 2) the definition of social is rather stretched, including Pandora and Zillow, which are not really…Read More

Category: Contrary Indicators, Psychology, Valuation

Is Crude Oil About to Collapse?

The cover story in this week’s Barron’s is a canary yellow screamer: Ready for $150 Oil. (click cover at right for larger graphic) Normally, the magazine cover indicator does not work with business press; it only applies to mass market magazines (think Time or Newsweek). In the present case, Gene Epstein is forecasting a new…Read More

Category: Contrary Indicators, Economy, Energy, Financial Press, Really, really bad calls

Window Dressing Proceeds Apace

With 6 of the past 7 weeks in the red, the markets have managed to string together a series of winning days. Daily gains both this week and last have ranged between 0.50% and 1.25%. Indeed, the Dow’s gains on Monday and Tuesday represent the first consecutive triple digit gain for the Industrials  since December…Read More

Category: Contrary Indicators, Markets, Technical Analysis, Trading

VIX: Where is the Panic In the Markets?

Click on chart for larger image > Despite the concern about the economy, Greece, China, etc., and general sentiment readings, the VIX remians surprisingly low: BusinessWeek: No Panic in Options After VIX Takes Six Weeks to Exceed Average It took six weeks of equity losses, a series of lower-than-estimated economic reports and political turmoil in…Read More

Category: Contrary Indicators, Markets, Psychology, Technical Analysis

Checklist: How to Spot a Bubble in Real Time

Are the Linked In/Groupon IPOs proof we have a new bubble in Tech? Are US Treasuries a bubble? Commodities? There have been numerous attempts by many Fed economists to argue that bubbles cannot be seen as they happen, and they we can only spot them after the fact. I believe they are incorrect. We can…Read More

Category: Contrary Indicators, Psychology, Trading

Uh-Oh: Gold on the Cover of NYT Magazine ?

I am not quite sure what to make of this NYT magazine cover. On the one hand, it is gold on the cover of a mainstream magazine. But its less convincing as a magazine cover contrary indicator. Compare it to the Housing peak covers in Fortune (May 2005) or Time (June 2005). The focus here…Read More

Category: Contrary Indicators, Gold & Precious Metals

Short Memories (Fade the Inflation Hysteria, II)

Flashback to June 2008 (only three short years ago): Headline CPI was running very close to 5.0 percent.  The Fed funds rate was at 2.0 percent.  Brent crude was $132/barrel.  The Fed’s June 2008 minutes mentioned the word “inflation” 110 times (“deflation” and “disinflation” combined:  zero), and also contained this caveat (emphasis mine): With increased…Read More

Category: Contrary Indicators, Cycles, Data Analysis, Economy, Federal Reserve, Inflation