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Sentiment Overview For Week Of September 7th 2007 at Trader’s Narrative

The sentiment overview for this week in the markets:

Sentiment Surveys
The usual suspects: AAII, Investor’s Intelligence, LowRisk, Consensus and Market Vane did not vary significantly over this past week so I won’t go into detail.

ISE Sentiment Index
Although technically a measure of options activity (ratio of puts to calls), the ISE Sentiment Index (ISEE) reached a 32 trading day high yesterday at 151. Today’s reading hasn’t been release but going by the intraday data, my guesstimate is in the high 140 range (UPDATE: 154). The 10 day moving average of the ISE put/call ratio has reached 118, well off its multi-year low in the 90’s range - where it gave a wonderful signal to mark the inflection point.

Magazine Cover Stories
This unusual sentiment indicator only gives signals sporradically but when it does, it pays to take notice. In August there were multiple negative cover stories. Here are 3 that I caught:

barrons cover market turmoil august 2007economist cover surviving the market august 2007fortune cover market shock august 2007

Notice the liberal use of the color red (with its obvious and subconscious connotations). Also, the Economist cover art not only shows a surfer, perilously hanging ten - about to be engulfed by a larger wave behind him - but those grey specs are four sharks in the water waiting for the inevitable.

The last time I featured a negative Economist cover was last summer when they ran a photo of a bear in the woods, just as the stock market was in the middle of its correction. The swoon lasted another month and prices dipped slightly lower than when the cover story appeared but clearly the worst was already over.

And lest you think that cover stories only have contrarian power when they are bearish, consider the glowing Akamai cover story in Forbes magazine in mid-April when it was trading around $50 a share. Now it is scraping $30.

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5 Responses to “Sentiment Overview For Week Of September 7th 2007”  

  1. 1 Johan

    You wrote this message on the 7th. You missed the bottom by 3 days ;)

  2. 2 Babak

    What can I say Johan? I’ll try harder next time.


  3. 3 scood

    Boy youve got a tough public out there Babak! Still ive got to give you A on those general mkt calls- BUT not so much on the gold call- whats your take on it at this point- its a tough nut

  4. 4 Babak

    scood, thanks for the compliment. You’re right about gold (and inversely the dollar). I’ve been bearish on gold and bullish on the dollar which hasn’t played out well to put it kindly.

  1. 1 Sentiment Overview: Week Of September 14th 2007

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