Trader’s Narrative

Last week I briefly mentioned in the weekly sentiment overview that aggregate hedge fund equity exposure was actually short.
Just a few weeks ago this metric from Carpenter Analytics dropped close to the low in 2004. But it has since recovered and is now just below the zero line again.

This is a tough indicator to interpret […]

As opposed to just a few weeks ago where I had to scrape bits and pieces of information to put together a sentiment overview, this week we have an over abundance of data and indicators, so lets get started:
Hedge Funds Net Short
Based on information from Carpenter Analytical Services, the average hedge fund was just until […]

There has been so much happening that an important sentiment indicator which I usually watch for slipped through the cracks and wasn’t mentioned in the sentiment overview for last week:

And BusinessWeek’s cover asks: Is It Safe Yet?
With the main article inside having a very bloodied bull staggering.

bearish, bear market, cover sentiment indicator, Economist, financial […]

We went from lukewarm, boring sentiment overviews to white hot. As the saying goes, “May you live in interesting times”.
Volatility Indices
I complained in last week’s sentiment overview and the VIX responded giving us a real spike to 42.16 (VXN to 40.44).
These are levels at which we can comfortably say there is true fear in the […]

The neutral and meandering sentiment landscape continues…
CBOE Put Call Options
Let’s start with the one sentiment indicator which showed some form of conviction this past week: the CBOE equity only put call ratio. Last Tuesday, it almost reached the coveted 1.0 level:

Although it came a hair short (0.99) it still approached extreme levels which have denoted […]