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Sentiment Overview For Week Of August 17th 2007 at Trader’s Narrative

Rundown of the usual and unusual sentiment measures for this most interesting trading week:

Hulbert Stock Newsletter Sentiment
The HSNSI measures the average stock market exposure among a subset of short-term market timing newsletters. As of yesterday’s close it reached -11.3%. Last week it was +8.6% when I pointed out that although that was low, usually we need to dip into negative territory. Its historic range extends from +79.7% to -81.8%. But the really negative stuff is for bear market bottoms.

Investor’s Intelligence
II’s bearishness has increased precipitously as the market has fallen. As the market topped they numbered around 22% but now they are 32.6%. That may not seem like a high number but relative to previous II readings, this is close to reaching its extreme. The bulls have likewise dropped from around 55% to 43.8%.

Puzzlingly the retail investors at the AAII have been very reluctant to become defensive. This week they finally inched their way into the bear side with 46% bears and 42% bulls. Although they’re going in the right direction, reducing bullishness by 4% points and increasing bearishness by 7% points, they haven’t really responded in the usual skittish way.

Market Vane
After I wrote about Market Vane last week, a reader pointed out that it may not be contrarian after all. They mentioned that in the past MV becomes bearish just as a major bear market or crash is about to occur. I’ve looked over the historical chart and I can’t really see this. Plus, they’ve already incrementally decreased their bearishness (by 2% points to 58%). So I’m still regarding this through a contrarian lense and see it as a bullish omen.

ISEE Call Put Ratio
As I pointed out although the ISE call put ratio didn’t reach a daily extreme reading, the ISEE index’s 10 day moving average did fall to historic lows seen only twice before. Things have been a bit wonky with the ISE and eventhough I’m pretty sure this data is accurate my trust has been eroded by their inexcusable lack of transparency and communication about their error.

CBOE Put Call Ratio
The traditional put call ratio (CBOE equity only) spent three days above 1.0 this week: Tuesday 1.08, Wednesday 1.05, Thursday 1.02 This is highly unusual and indicative of sustained fear. Obviously after today’s strong showing it declined to 0.75.

Although sentiment didn’t or hasn’t reached the kinds of extreme’s that I’d like to see at a significant market bottom, there is no question that we have pervasive bearishness out there. Here’s what appeared on the front page of digg this morning:
negative digg fed injection.png

It linked to an article at which in fact didn’t say anything remotely similar to the headline on digg. Nevertheless, it was dugg and made it to the front page. Perfect unorthodox contrarian indicator.

Did you find any other ones?

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