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Here’s this week’s sentiment overview:
Let’s start with the most common sentiment measures:
The AAII came in this week at 27% bullish and 46% bearish - little changed from last week (one percentage point variation, if you are that curious).
ChartCrafts’ Investor’s Intelligence results this week shows a bit more movement with the bulls and bears returning to approximate parity: bulls at 38.7% and bears at 36.7%
Amazingly enough, during this catastrophic bear market, the retail option trader, as measured by the ISEE Sentiment index has been completely unfazed. The index is a ratio of call to put option purchases (to open a position) and therefore, a low number denotes fear. Looking at the equities only chart of the ISEE from 2008 to now there is remarkably little concern as the index has only fallen below parity a handful of times:
CBOE Put Call Ratio
The traditional option sentiment index is mirroring what the ISE sentiment index is telling us. As you can see from the charts below, the last time puts were more popular than calls, we had a significant rally, which put in the low (for now). However, as the market continued to recover into the new year, it was puzzling to see fear also increase. And now as the market has weakened and approached the November 2008 levels, option traders are not concerned in the least:
Again, this is similar to last week’s sentiment overview where we saw evidence of too much optimism. All in all this tends to paint a fairly clear picture of the prevalent sentiment out there but not one that many longs will be happy to see.
Economist Magazine Cover
Don’t know how I missed this since I was actually reading the magazine! Here is this week’s cover:
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