Data Brief - November 17, 2011
Posted 11/17/11 3:30 PM ET by Jason Goepfert Archive
Stock And Industry Sentiment
A few weeks ago, we looked at stock and industry sentiment within the S&P 1500 based on a Sentiment Score.
That Score is derived by averaging five measures of sentiment for each stock:
We have added two additional measures:
Because corporate insiders are a non-contrary indicator, the Sentiment Score uses the inverse of those numbers. So if there is very HIGH insider selling pressure (negative for the stock), it will actually push the Sentiment Score HIGHER (meaning that the stock is "overbought" or "over-owned").
From a contrary point of view, theoretically the stocks most likely to bounce would be the ones with low scores across all the various measures. Again, if the Insider columns are giving a low number, then that means insiders are buying a lot of stock relative to other companies in the S&P 1500. So in those cases you would have a lot of pessimism from the general public, pessimism from Wall Street, but optimism from corporate insiders.
Take a look at First Financial Bankshares (FFIN) as an example, the most under-owned stock in the S&P 1500:
Then compare that to Aeropostale (ARO), the most over-owned:
This is by no means a recommendation to buy or short either stock, but it is a jumping-off point for further research. As we get more history with the data, we will be more able to refine the probabilities for out- and under-performance.
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