Posts filed under “Sentiment”

Question: What Is Driving Hindenburg Omen Internals?

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Source: Stockcharts

 

 

Definition: Hindenburg Omen is triggered when: (1) more than 2.2% of stocks on the NYSE are at 52-week highs AND more than 2.2% are at 52-week lows, (2) the 50-day moving average is trending higher, (3) the McClellan Oscillator is negative, and (4) new 52-week highs don’t exceed new lows by more than 100%.

 

Yesterday, we asked the question Why people fear the Hindenburg Omen? despite its mixed (i.e., awful) track record in forecasting crashes.

Today, I have a more specific technical question: With markets up 16% YTD as of mid-May, we obviously had a huge number of stocks making 52 week highs.

But we also have seen a spike in rates, suggesting that anything credit or bond related — closed end funds, mortgage REITs, bond funds, etc. — trading on the NYSE are going to be trading appreciably lower. Perhaps even to 52 week lows.

Then there is Japan, and the large number of ADRs and ETFs on the NYSE. These may also be trading lower; the same for various European ADRs that are faltering.

My technical question is this: What happens if we look at the NYSE US operating company only for this indicator — does it change its track record? Does removing the non equity names improve the signal’s otherwise mediocre track record?

Alternatively, when successful Hindenburg Omens have been made in the past, are bonds/ADRs/closed end funds/non operating companies a factor?

Is it possible to generate a track record using Nasdaq as the basis instead of the NYSE? What about the 500 names in the S&P500.

Inquiring minds want to know!

 

Hindenburg-disaster

Category: Markets, Sentiment, Technical Analysis

What Do You Control?

During this past month, we have seen significant moves up and down. Volatility has risen; there have been some scary drops in Asia, and some follow through selling (more or less) in the US. We have seen small measures of over-reaction, along the lines of “What do I do? What should I do? Should I…Read More

Category: Investing, Sentiment, Trading

Don’t Be This Trader

Via Trader Habits, here’s another graphic to add to our massive collection of Sentiment Cycles (here, here and here):   Don’t Be This Trader  

Category: Sentiment

Random Thoughts: Comebacks, Intraday Reversals and the like

Since it is a Friday before a 3 day holiday weekend, it is a good time to kick back and think about what the recent market action might (or might not) mean. • Most Day-to-day market action is noise, There is very little signal involved, with the vast majority of commentary simply after-the-fact rationalizations of…Read More

Category: Investing, Markets, Psychology, Rules, Sentiment, Technical Analysis

Percentage of SPX Stocks Over 200 Day Moving Average

Renaissance Macro Research, May 14, 2013   Jeff deGraaf, technician extraordinaire (formerly of Lehman now at Renaissance Macro Research) makes an interesting observation about the heavily overbought markets. Last week, the S&P500 had ~93% of all stocks trading over their 200 day moving average. Normally, this degree of overbought should lead to a correction. As…Read More

Category: Markets, Sentiment, Technical Analysis

Habits of the Bear, Bull Markets and Agency Issues

  “If you’re bullish and wrong, you usually have plenty of company. But if you’re bearish and wrong, it’s almost unforgivable.” -Bob Kargenian, TABR Capital Management, Barron’s DECEMBER 15, 2012     The above quote from Barron’s has been on my mind for a while. I thought of it again as the markets have made…Read More

Category: Investing, Psychology, Sentiment, Valuation

Exuberance? Euphoria? Hardly . . .

Yesterday, the DJIA closed at a new record high, at 15,056.20 while the S&P500 closed at 1,625.96. While I keep hearing some people claim there is an excess of giddiness, please excuse me for failing to see it. My frame of reference is the 1999-2000 top, and I certainly do not see anything remotely resembling…Read More

Category: Markets, Sentiment

Flows say: Still No Confidence in Equities

Cyclicals vs. Defensives
Cyclicals vs. defensives

 

There are many different ways to measure investor confidence and market sentiment.BoA Merrill Lynch looks at their client flows relative to the market. Some of this is instructive:

On the one hand, private clients were net sellers in four of the last five weeks. However, as the chart shows above, there is a possible rotation starting away from Defensives and towards Cyclicals. That move might suggest that sentiment is improving.

One caveat: It is easy to cherry pick what you want when it comes to investor sentiment. This has a bullish color to it, but there are lots of other bearish readings as well.

 

 

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Category: Investing, Markets, Sentiment

Interview: Ned Davis, NDR

  “We are in the business of making mistakes. The only difference between the winners and the losers is that the winners make small mistakes, while the losers make big mistakes.” -Ned Davis   If you are a regular main street investor, you may never heard of Ned Davis. If you are a market technician,…Read More

Category: Philosophy, Psychology, Sentiment, 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