Damned Sentiment Data - "dumb" money is short

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brettman9

Its amazing how clear the bearish picture adds up at this point. Unfortunately, it's too clear.

The American Association of Individual Investors survey data is the most consistently proven contrarian survey data over the past two decades. When they report extreme bearishness, you're at some kind of reasonably significant low. When they report extreme bullishness, you're at some kind of reasonably significant high. As far back as the data set goes, they've never been both extreme and correct at the same time.

As of the latest survey (9 EST Thurs), the AAII bull ratio was at it's lowest levels since 2003!! - less than 25% bullishness...It was at about 70% bullishness on the day of the October SPX highs, and about 60% bullish at the Dec highs.

I am still bearish, but I'm getting antsy at the thought of the sort of whipsaws and grinding action we're going to have to put up with until that sentiment gets shaken and rewired into selling fuel.
 
Quote from brettman9:

Its amazing how clear the bearish picture adds up at this point. Unfortunately, it's too clear.

The American Association of Individual Investors survey data is the most consistently proven contrarian survey data over the past two decades. When they report extreme bearishness, you're at some kind of reasonably significant low. When they report extreme bullishness, you're at some kind of reasonably significant high. As far back as the data set goes, they've never been both extreme and correct at the same time.

As of the latest survey (9 EST Thurs), the AAII bull ratio was at it's lowest levels since 2003!! - less than 25% bullishness...It was at about 70% bullishness on the day of the October SPX highs, and about 60% bullish at the Dec highs.

I am still bearish, but I'm getting antsy at the thought of the sort of whipsaws and grinding action we're going to have to put up with until that sentiment gets shaken and rewired into selling fuel.
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If unclear, why even trade in this environment? Why subject yourself to the grief?
It shouldn't be necessary to trade everyday in every environment.
 
There are investor adages:-

"Buy in doom, sell in boom" and
"Buy low, sell high"

Very few people ever do, which is why most people who play the markets lose.

Right NOW people should be buying. NOT when the market is at all time highs! (Of course!)

I can just imagine telling my kids in a few years time:-

"Kids, see these Citigroup shares that are worth $80 now, guess at what price I bought them at? Under thirty bucks kids"

At the moment all the Wall St propagandists are all parroting each other "Long oil, gold...short Financials"

They opposite is where the money is IN THE LONG TERM.

One poor (probably revised) jobs report doesn't mean they all will be.
 
Oh...I'm in. pretty deep in a few ways and into the money from Monday morn, and feel like a few of these could turn into big plays...so I really don't want to get shaken like a punk or trim out of a real move...I just can feel my resolve waver when I think about how full the bus may be.

Either way, just wanted to pass along the data as it struck me in the gut
 
Quote from Alex_in_Oz:

There are investor adages:-

"Buy in doom, sell in boom" and
"Buy low, sell high"

Very few people ever do, which is why most people who play the markets lose.

Right NOW people should be buying. NOT when the market is at all time highs! (Of course!)

I can just imagine telling my kids in a few years time:-

"Kids, see these Citigroup shares that are worth $80 now, guess at what price I bought them at? Under thirty bucks kids"

At the moment all the Wall St propagandists are all parroting each other "Long oil, gold...short Financials"

They opposite is where the money is IN THE LONG TERM.

One poor (probably revised) jobs report doesn't mean they all will be.
More...

Agreed. Amazing how everyone is putting so much weight into a report that is revised often and probably inaccurate at this time. Financials are a buy, since most people right now think they will go bankrupt.
 
I'm talking about trading. But not planning on daytrading this week, so just working with open swings right now...

I'm sitting short tech, short s. Korea, short regional banks, long ag eq (MOO), long gold...all plays entered between 12/26 and 1/7.

Thinking about opening up long brics on first sign of strength. if I were to go in full blown in the es or something tomorrow, I would be looking to buy on any shakedown in the first 15
 
trading cash for shares at 30 and trading shares for cash at 80 - sounds like trading to me, the time frame is irrelavent.

Quote from infolode:

Ok, you lads are talking about INVESTING as in equities NOT TRADING, like this forum is titled.

Forums >> Main >> Trading
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Quote from brettman9:

I am still bearish, but I'm getting antsy at the thought of the sort of whipsaws and grinding action we're going to have to put up with until that sentiment gets shaken and rewired into selling fuel.
More...

Yes, and add that to this...

Its option expirations week with a lot of people long January put options... They are going to cover sometime this week.. and a lot of hedged short futures positions against them will be covered too... as those hedged shorts are lifted the market moves up a touch... as the market moves up a touch weak hands cover... as they cover the market moves higher... as the futures move higher weak swing hands cover... more put owners cover... and...

The market inches up and inches up until some larger size short traders get tired of watching the futures creep up and they cover and then boom large size longs jump in and extend the rally really creating a short covering rally over a day or two... so up we go into another option expiration market mechanics long rally that makes / forces late to cover put owners and futures shorts to eat their profits with a bitter saltine cracker...

not set in stone but the usual scenario for expiration week...


<img src="http://www.enflow.com/p.gif">
 
Right....but may be mitigated by the ratios. Not at extremes. At all. Middle of the range. So, maybe it can get thumped afterall.

Besides, I like being short when I feel nauseous about my exposure.
 
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