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The Sentiment Thread - Identifying tops and bottoms


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The Sentiment Thread - Identifying tops and bottoms

 

theatre-masks-happy-and-sad-thumb5554980.jpg

 

As we know, market tops and bottoms are forged at times of peak optimism/pessimism.

 

So this thread is to identify common indicators and mainstream signs that we are at those peaks & bottoms.

 

 

LINKS

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NAAIM Sentiment----- : http://www.naaim.org...ager-sentiment/

Investors intelligence : http://www.investorsintelligence.com/x/charts/sentimentChart?_period=3y&stype=diff&sp500=y&w=600&h=400

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Interesting to see that positive sentiment as SPY slides over 5 days

 

The positive sentiment (amongst small investors) has been evident in the Gold market (I heard), even as gold has been weak

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Interesting to see that positive sentiment as SPY slides over 5 days

 

What's most significant is that the Mid Nov market "bottom" was made with nothing like the washout in sentiment that usually occurs at market bottoms, and to me that suggests that there is no short-covering fuel to propel us higher, and we will need to make new lows that really knock the stuffing out of the bullish sentiment - ie, an NAAIM reading of sub-40.

 

The VIX index is another great sentiment gauge, and that barely registered any sort of "panic" that you would expect at significant bottoms.

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What's most significant is that the Mid Nov market "bottom" was made with nothing like the washout in sentiment that usually occurs at market bottoms, and to me that suggests that there is no short-covering fuel to propel us higher, and we will need to make new lows that really knock the stuffing out of the bullish sentiment - ie, an NAAIM reading of sub-40.

 

The VIX index is another great sentiment gauge, and that barely registered any sort of "panic" that you would expect at significant bottoms.

 

Makes sense...

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What's most significant is that the Mid Nov market "bottom" was made with nothing like the washout in sentiment that usually occurs at market bottoms, and to me that suggests that there is no short-covering fuel to propel us higher, and we will need to make new lows that really knock the stuffing out of the bullish sentiment - ie, an NAAIM reading of sub-40.

 

The VIX index is another great sentiment gauge, and that barely registered any sort of "panic" that you would expect at significant bottoms.

 

Can VIX be manipulated?

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Can VIX be manipulated?

Possibly, but it would be frighteningly expensive to do that - so probably not

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Yes.

Even Bloomberg was talking about how Sentiment was getting to one-sided, and a Top may be near

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Is it time to be contrarian?

 

This is a terrific read, and has picked up the general high sentiment:

 

http://thegreatbearm...blogspot.co.uk/

 

A few days ago, President Obama was named "Person of the Year" on Time Magazine and appeared on the magazine cover. The magazine cover picture can be seen here. The Magazine Cover Indicator is a peaking signal --- it is an indication that the "Obama brand" is approaching a peak of massive scale and a multi-year decline is imminent.

 

DJIAChart12282012A.jpg

 

 

If anyone has read any books by David Dremen, they revisit exactly this sort of stuff and make a very compelling case for taking your money off the table.

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Looking high, but the market could still go on rising

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This article is from 23rd Dec but still highly relevant (obviously):

http://www.thetechnicaltake.com/2012/12/23/investor-sentiment-this-for-certain/

 

In a span of 4 weeks, investors (as represented by the “dumb money” indicator) have gone from a state of despair to one of euphoria. In over 20 years of data, this is the shortest time it has ever taken the indicator to go from extremely bearish to extremely bullish. I am not sure what to make of this tidbit of information, but it does point out how silly and fickle investors have become. One minute they are bearish, and the next they are bullish.

 

---------------------

Interpret that however you want!

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COMMENT by Paul Thomason, Elliott Wave Market Service

 

I came across this article by Tyler Durden at Zero Hedge which provides a very insightful summary of the extreme bullish optimism that belies the market at the present time. You need to be aware that these conditions mirror or even exceed the extreme levels seen at the all time highs in 2007.

There's some links in the article that are also worth reading if you time, here it is - 'Hedge Fund Most Levered And Long Since 2004!'

 

Meanwhile, in the markets - SNAFU,

 

After the rally from over-extended volatility recedes, the fact remains that investors are far too optimistic and a major reversal is at hand.

As far as volatility goes, don't be fooled by short term extreme movements. Volatility is now intermediate bullish and is headed sharply higher, and as direct result equity markets are headed sharply lower - comprende?

In the meantime, let's continue to defer our analytics models to tell us when that next major move lower is technically confirmed as being 'underway'.

 

To find out more, please log-in to view the Daily US Market Forecast for January 14, 2012 which is now available. elliottwavemarketservice.com

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  • 2 weeks later...

I'm very willing to stick my neck out an saying this is now a MAJOR PEAK in sentiment and prices:

 

NAAIM record reading:

http://www.naaim.org...dsenttrend.aspx

 

II 18 month high:

http://www.investors...0=y&w=600&h=400

 

Obama 60% approval rating:

http://www.washingtonpost.com/page/2010-2019/WashingtonPost/2013/01/30/National-Politics/Polling/release_199.xml

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I'm very willing to stick my neck out an saying this is now a MAJOR PEAK in sentiment and prices:

 

NAAIM record reading:

http://www.naaim.org...dsenttrend.aspx

 

II 18 month high:

http://www.investors...0=y&w=600&h=400

You could be right.

A bottom for Gold & Gold shares is possible too

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