Trader’s Narrative

Here’s the sentiment recap for this past week:
AAII
Although the participants fill out this survey after the market closes on Wednesdays, the AAII this week actually showed an increase in bearish sentiment. Considering that we had an amazingly trending upday with a wide range, you have to wonder just what it will take to sooth the […]

On average, most of the annual returns in the stock market come from the last few months plus January. This goes by the name of the January effect and other labels.
But so far this year, we haven’t really seen the stock market follow this script. Who knows, with all this oversold technical situation, maybe it […]

Around the time that the internet bubble burst, small caps started to outperform large cap stocks. And they continued to do so through the bear market and the subsequent bull market.
Now it seems that large caps may be getting the upper hand once again. Here’s a chart of the S&P SmallCap 600 compared to the […]

At the end of July I mentioned that it was time to consider the battered financial sector. Back then, the bullish percent chart for the sector approached 25%, a level which usually means oversold. But yesterday, this same indicator dipped to just 16.13%:

After I mentioned the opportunity to go long the sector, banks and financials […]

According to the simple stock market timing method which relies on the 30 day rate of change of the 10 year treasury bonds, we are very oversold and should expect a rebound here.
This system is somewhat better at finding tops than bottoms, but it is a good general indicator to throw in the pot:

The rate […]