Consensus, Inc. Sentiment Survey - Treasury Bonds

Click here for chart

APPLICABLE TIME FRAME(S):  

INTERMEDIATE

UPDATE SCHEDULE:

Each Saturday morning by 11:00 AM EST

REPORTING DELAYS:

Two weeks, so the most recent update will be at least two weeks old.

EXPLANATION:

The Consensus survey monitors the attitudes and positions of an extensive mix of both brokerage house analysts and independent advisory services (they have several hundred contributors).  The data covers a broad spectrum of approaches to the market, including the fundamental, technical and cyclical.  Only after an advisor or analyst publishes their opinion - and it has a chance to influence the investing public - does Consensus consider the opinion for their survey.  The editors determine the percentage of their contacts who are bullish on the market.  Like most contrary indicators, when the survey shows too many advisors as being bullish, it very often corresponds to market highs.  Conversely, too many bears suggest that the market may soon find a low.

The weekly Consensus number of bullish advisories is available each week in Barron's.

GUIDELINES:

Like most sentiment indicators, the percentage of bullish respondents in the Consensus survey should be interpreted in a contrary manner.  Very high levels of bullishness often leads to the opposite market behavior - a decline in bond prices and rise in yields.  Conversely, when the bullish percentage is extremely low, then that means pessimism is high, traders have probably already sold their positions, and bonds may be due for a rally (and yields decline).

STATS:

*Standard Deviation.  See below:

68% of readings (1 standard deviation) should be between 30% and 58%

95% of readings (2 standard deviations) should be between 16% and 72%

99% of readings (3 standard deviations) should be between 2% and 86%

In other words, we should expect a reading under 16% or over 72% approximately 13 times per year.  Since such a reading would be relatively unusual, it suggests that we may be seeing an unsustainable trend.  These figures assume a normal distribution curve.

ADDITIONAL RESOURCES:

Consensus, Inc. (www.consensus-inc.com)

Barron's (www.barrons.com)

© 2005  Sundial Capital Research, Inc.  All Rights Reserved.