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1.) Mutual Funds Cash Holdings
Mutual funds’ cash holdings have just reached 3.4%, the lowest reading in the 60-year history of the indicator! In other words, funds are 96.6% invested. Previous extreme readings occurred in 2000 and 2007. Even in the minor setback of the early 1990s, mutual fund managers got worried enough to get up to double-digit percentages of cash. But now they are more optimistic than ever.
2.) Annual Dividend Yield
The Dow Industrial Average has only a 2.7% annual dividend yield, lower than it was in 1929! The S&P’s yield is only 2.1%. In the past century of stock market history, the only peaks at which the dividend yield indicated more optimism were those of 2000 and 2007.
These readings gave us what commentators call the “lost decade,” the worst ten-year return for the S&P ever. Some people think the stock market’s poor ten-year return is a reason to be bullish. But the sentiment figures show that the majority is still historically optimistic, which is not the way bear markets end.
2.) P/E Ratio
Many articles are talking about the P/E ratio being bullish. One problem is that so many people are talking about it. Almost no one talks about the dividend yield or the percentage of cash in mutual funds.
Even so, the real P/E has merely improved to moderately bearish levels. Most of the neutral readings you see in the paper are based on projected earnings, not actual earnings. But projected earnings have almost always had—surprise, surprise—a bullish bias, so the popular version of P/E mixes hope with reality. Hope is the market’s problem, not the solution. As noted in Conquer the Crash, P/E is the least useful indicator of them all. People spend far too much time with it. It speaks loudly only a few times a century. The rest of the time—like now—you can ignore it.
3.) Daily Sentiment Index
As for short term indicators, the latest Daily Sentiment Index shows 83% bulls on the S&P. That’s not a bottom.
4.) American Association of Individual Investors (AAII) Poll
The American Association of Individual Investors (AAII) poll did show very few bulls three weeks ago, which was congruent with a short term low. But after a three-week rally, the same poll shows bulls right back at the upper end of the historical range. In fact, the current reading of 50.9% is higher than the 48.5% at this year’s market high in April, and the percentage of bears, at 24.3%, is lower than the 25.3% at the market’s all-time high in October 2007!
5.) Bull-Bear Spread
The bull-bear spread, moreover, is the widest since May 2008, just before the S&P fell from 1440 to 667 in 10 months.
6.) Put/Call Ratios and 7.) VIX
Put/call ratios are not at market-bottom levels, and neither is the VIX.
You can’t make a short term contrarian case here. That doesn’t mean the market can’t rally. It means you can’t legitimately make a sentiment case for a rally.
8.) Intraday Trading Index (TRIN)
Optimism also shows up in the way the stock market is trading. From May 6 (flash-crash day) until now, 21 trading days have had an intraday Trading Index (TRIN) reading of .25 or lower, and today's (9/17) opening had the lowest reading of the entire period: 0.06! Such low readings indicate buying panics. Only 16 days since then have had a commensurate intraday reading of 4.00 or higher, indicating selling panics. So, investors have more often wanted to buy than sell. This is not how a market gets oversold.
9.-13.) Momentum Indicators: TICK, Closing Premium, Upward Gaps, Open TRIN, Volume |
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狗仔卡
发表于 2010-9-22 05:54 PM
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发表于 2010-9-22 08:46 PM
