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Monday's Need-To-Know  

Smart / Dumb Money Confidence

 

* While many disparage Friday afternoon reversals, historically they're not so rare as to be completely dismissed.

 

* Reversal bars like we saw last week, however, have a poor history of marking exact low points - usually there was a lower close sooner rather than later.

 

* Small options traders have picked up their interest in protective puts, but it's still not to a level that we've seen near prior lows.

 

Read more in today's Morning Report

 

 

The Dumb Money is 46% confident in a rally.

The Smart Money is 50% confident in a rally.

 

Smart/Dumb Confidence

 

View longer history       Download data

 

 

 

 

Most Recent Report  >>

 

Morning Report  February 8, 7:30am EST

 

 

  See the latest subscriber comments here

 

More Reports  >>

 

Morning Report  February 5, 7:30am EST

 

Intraday Report  February 4, 2:05pm EST

 

Go To The Archives

 

 
 

 

 

 Sentiment Summary for February 8, 2010

 

 

Short-term Outlook:

 

Neutral

From Jan 27, 1090 SPX

 

 

Intermediate-term Outlook:

 

Neutral

From Feb 2, 1104 SPX

 
 

 

What:  We will remain neutral for now.

 

Why:  On Friday, we were looking to switch to a minor bullish position if the S&P suffered a substantial drop and started to recover.  It didn't quite get to the target area, though, and the afternoon reversal wasn't all the impressive in terms of recovering the prior days' losses.  Historically those types of reversals have a poor record at pinpointing major turning points (see below).  While we have an increasing number of extremes among our indicators, given the price action and the studies we've looked at recently, we won't be looking to turn bullish from here unless we get another whack lower in the days ahead, or price action recovers to a point where it's more evident the uptrend is likely to resume.

 

The S&P 500 e-mini futures are trading down 3 points at 1057 as this is sent.

 

Bearish Inputs 

* Nothing notable.

 

Bullish Inputs

* Nothing notable.

 

 

What:  We will remain Neutral for now.

 

Why:  On January 8th, the Dumb Money Confidence hit 75%, and nearly every time we've seen that kind of extreme in the past 15 years, any further short-term strength (over 2-4 weeks) was reversed longer-term (over 1-3 months).  Now that that's happened again, we're getting conflicting studies about whether the price action over the past two weeks is a sign of a larger trend change.  We don't have an overwhelming number of signs that we have seen a major market peak, and several sentiment measures have turned very quickly from where they were a couple of weeks ago.  The quick failure of the recent multi-month low and double 1% up days, as we discussed last week, could actually turn out to be a multi-week positive (as ironic as that sounds), and we'll be watching the next several sessions closely for the possibility of a washout type of bottom.

 

Bearish Inputs 

* Newsletter bears lowest in 22 years earlier this month.

* Surge in speculative options activity earlier this month.

 

Bullish Inputs 

* Uptrends across the board.

* An increasing number of indicators are turning bullish (for the market).

 

 
 

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Equity Market Indicators

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Notes:

Since the March low, we've seen a few times where the percentage of our indicators at a Bullish (for the market) extreme jumped to 16% or so, and/or the percentage at a Bearish extreme dropped under 5%.  Each time, the market rallied almost immediately.

 

Now we have the Bearish indicators well under 5% and the Bullish above 25%, the widest spread since last March.  If the market continues to weaken from here, then it would suggest a definite change in character and in that case we'd be looking for the Bullish indicators to spike to 50% or more before becoming too anticipatory of a sustained rally.

 

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

 

 

* New extreme

See all indicators

 

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Most Popular

 

Notes:

Below we show the most popular charts for Stocks (and Sectors), Bonds, Commodities and Currencies as determined by web traffic and the most-favorited.

 

Stocks

(see all indicators)

 

Bonds

(see all indicators)

 

Intraday Cumulative Tick - NYSE

Down Pressure - S&P

Options Speculation Index

Smart Money / Dumb Money Confidence

Sector Breadth - Semiconductors

Rydex Assets - Electronics

Rydex Assets - Biolech

 

 

Rydex Bull Ratio

CoT - 10-Year Futures

Consensus Bulls

Commodities

(see all indicators)

Currencies

(see all indicators)

 

CoT - Crude Oil

Rydex Precious Metals

Public Opinion - Cotton

CoT - Orange Juice

Public Opinion - Hogs

 

 

Rydex Weak Dollar

CoT - Japanese Yen

CoT - Euro

 

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Index Seasonality

 

February 9th is the 7th trading day of the month

 

 

Click month to view:  Jan  Feb  Mar  Apr  May  Jun  Jul  Aug  Sep  Oct  Nov  Dec

 

 

Click month to view:  Jan  Feb  Mar  Apr  May  Jun  Jul  Aug  Sep  Oct  Nov  Dec

 

 

Click month to view:  Jan  Feb  Mar  Apr  May  Jun  Jul  Aug  Sep  Oct  Nov  Dec

 

 

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