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Give me a few seconds and stare into the center of the pattern in the upper left. See all kinds of patterns? These repeating patterns in the Sunflower continue to influence the markets over the past few months and past few years.
The 8%+ trading range continues to be impacted by Fibonacci support and resistance levels. A series of higher lows has taken place at these Fib numbers along line (1).
The sideways channel is going to break sometime… in your opinion will more people be surprised by a breakout or breakdown? Where do sentiment readings stand right now? Key to this pattern…the majority is soon to be surprised!!!
Bill and Mike….sentiment question/discussion. I like the polls, yet they can change quickly. My favorite is the cash to stock ratio of the Rydex funds.
Polls reflect “opinions” the Rydex ratio reflects “action” already taken. Its one thing for people to say, “I am bullish or bearish” its another thing per making a move of selling stocks/equities and moving to cash!
What I found intersting was that even though the markets hit a low on 8/9 and retested it a few times, it wasn’t until right around 10/4 did investors bail from the stock market and raise a ton of cash at the Rydex complex! The ratio as of 10/4, reflectd that the crowded trade at Rydex was “in cash” and that the markets were due a rally, that should surprise many investors.
Over the last 15 years, when the Rydex cash ratio was high, it reflected an “overly bearish” situation and markets moved up more than most expected, for sure at the Rydex complex….
Chris
So Chris, what sentiment indicator do you use if not polls, like AAII?
p.s.: I have a TON of cash on SPXU 3x Bear ETF…hope the bears win!
Oooooo, nice piece…
Oct. 13, 2011, 6:11 p.m. EDT
‘Tug of war’ between bull and bear investors
By Angelica Tan
WASHINGTON (MarketWatch) — Retail investors’ bullish sentiment jumped to July levels in the past week, but the portion of investors expecting stocks to fall suggests markets have yet to hit a bottom.
http://www.marketwatch.com/story/tug-of-war-between-bull-and-bear-investors-2011-10-13
Hi Chris, I think the talking heads in the business news media are overly bullish…”all is well, Merkel and Sarkozy promised to plan for a plan by the end of the month” Myself I am overly bearish…so.
P.s.: Did we not just see a classic “bearish wick”???
Investors Intelligence newsletter writers are remarkably bearish at -11.9% (a relative extreme > except for 2008)
a retest of the uptend won’t have the fib support to help it
Based on the CNBC chatter, the bulls will be surprised by a deteriorating earnings outlook in 2012. The ECRI warned them…
Thanks for sharing the “poll” numbers…does anyone know what people are “doing” with their monies? Have they bought or sold? Where is the crowded position right now?
I will share in a couple of days one of the best sentiment indicators I have enjoyed using since the late 1990’s. I shared this on 10/4 with members and boy have the markets shifted since then…again this isn’t a poll, its a reflection of “action taken” by investors.
Thanks for sharing isto,
Chris
AAII: 10/12/2011
Bullish 39.8%
up 4.5
Neutral 23.9%
up 4.8
Bearish 36.4%
down 9.4
Excellent question Chris and a great post. My guess would be that we should at a minimum test the “golden mean” on this trend down to S&P 1020.
I’m guessing that means the current, more bearish, majority sentiment will be surprised? I was not sure which way to read this.
Oh, and your daughters are GORGEOUS 🙂
I’m sure they are equally bright and that all good things will come their way (and yours) – congrats to you all!