Sentiment Report - March 12 2012

Posted 03/12/12 6:30 PM ET by Jason Goepfert           Archive





Smart / Dumb Money Confidence  


NOTE:  I've promised my kids that during their spring break holiday - this week - I'll be present as much as possible.  That means these reports will only have updated charts, and little to no commentary.  There shouldn't be much, if any, interruption in the daily chart updates.


The Smart Money is 42% confident in a rally.

The Dumb Money is 63% confident in a rally.


Smart/Dumb Confidence

 (click chart for larger version)


Quick Links

Risk Summary  |  Today's Updates  Equity Indicators

Stocks and Sectors  |  Commodities  |  Comments 


Risk Summary


Short-term Risk Level:  5     





Intermediate-term Risk Level:  7     




Bottom Line

No change from late last week...given the Active Studies (see below) and other developments we've looked at recently, we're looking for a choppy to down market in the coming weeks. 


Bottom Line

We've been looking for weeks for some sign of weakness in the broader market, and finally the S&P 500 has broken several months-long streaks, and closed below support at 1350 (though it did manage to once again rebound right back above on Wednesday).  We normally look for at least two closes below support before getting too riled up about the potential for the uptrend to take a sustained breather.  Based on the studies we've discussed since late January, we'd expect a 2-4 week pullback of 3% - 8% in magnitude.



Today's Studies & Updates


This section will not be updated during the week of March 12th.





Active Studies & Updates                                                                     See expired studies


Bearish for equities 



Bullish for equities 

Date Description Priority   Date Description Priority
03/01 An extended trend Medium   12/23 Multiple follow-through days Medium
02/27 McClellan Oscillator divergence High   12/09 4th quarter gain of +10% Medium
02/17 "Black swan" indicators rise Medium   11/11 3 months of large unfilled gaps Medium
02/06 Surge in junk debt issuance Medium        
02/03 Equity Hedging Index gets extreme Medium        
01/31 Extremely low inverse ETF volume Medium        
01/25 Rydex traders exit cash, enter leverage Medium        
01/25 Odd Lot buyers pull back Low        
01/19 Liquidity Premiums hit an extreme Medium        
01/10 OEX vs. equity options Medium        
01/09 Spike in Nasdaq / NYSE Volume Low        
09/02 Low ratio of cash to equities Low        




General Equity Market Indicators                                                    See all equity indicators


Several times since mid-January, we've seen the number of bearish (for the market) indicators jump close to or above 30% of our total indicators.  That's a decent sign of increased risk for a market decline, though in the past that figure has soared above 40% or even higher.  Now that we've finally seen something of a break from the relentless uptrend that started 2012, the Indicators At Extremes is back to giving more normal readings.



More history:    Short-term Score      Long-term Score     Indicators At Extremes


Indicators At Extremes

* New extreme


Stock And Sector Sentiment                                                        Go to sector breadth charts


For much of the time from mid-January through mid-February, many of the sectors were in overbought territory.  Several of them started to slip, reflecting the poor breadth that accompanied the latest push to new highs in the broader equity indexes.  Now that "the market" has taken a breather, we're seeing some of those sectors already starting to head towards oversold.



See this Data Brief for more background on the Sentiment Scores




Currency / Commodity Sentiment                                See all currency/commodity indicators


With the correction from extremes in many currencies over the past couple of weeks, sentiment towards the US Dollar has become less enthusiastic, which is normal.  Traders have moved more into the Aussie Dollar.  We're also seeing some extremes in the energy contracts, particularly Unleaded Gas and Heating Oil.






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