Investor Fear Chart

[Bullitt]

Found a neat little chart that measures the amount of 'fear' words in common media and it's relationship to the Nasdaq. As one would guess, it's better to buy when there's fear than fearlessness.


The MarketPsych Fear Index shows a 10-day exponential moving average of the percentage of "Fear" words in the U.S. financial news displayed over a candlestick chart of the Nasdaq 100 (QQQQ).http://www.marketpsych.com/mkt_analysis.php

[Bullitt]

Surprisingly, the chart is closer to a buy than a sell.

New link: Market Psychology Money and Investing Personality Tests (http://www.marketpsych.com/index.php)

[sniper]

my weekly charts are lining up in a way that's saying buy opportunity possible next week, but I think we have another day or 2 down before a bounce.

[Bullitt]

Interesting. Are you using April highs as support/buy level?

I'm looking for a buy opportunity a little lower- around May 2011's high. That would be around a 10% decline from the recent high.

[sniper]

I usually look at chart patterns & use oscillator readings as confirmation when swings are likely. Weekly chart on the russell 2000 is near oversold on the ultimate oscillator, whenever it hits the 30 level it's usually when a bounce happens. I look for buy opportunities when the market is oversold

the daily and 15 minute charts are telling me we can see lower monday. from there, who knows haha.

[Bullitt]

Market Vane shows sentiment lower than 2008-2009.

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[Bullitt]

Climbing a wall of worry.

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[Bullitt]

Stuck at zero.

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[bmneveu]

Still? I could see that being a month ago, but surprised if that is the sentiment today.


Stuck at zero.

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[Bullitt]

It's positive, time to sell and run to G!

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[tsptalk]

It's positive, time to sell and run to G!

Sarcasm doesn't play well in writing. :)

[Bullitt]

In all seriousness, it didn't take much of the needle in the green to hammer stocks last week.

Markets were barely saved from a weekly bearish engulfing candle on Friday with powerful buying power stepping in. Sentiment really shot up after the technical breakouts of 200 dma and SPX 3,000 level. Looking for some cooling in the markets ahead.

[Bullitt]

When Dumb Money Confidence has been 79% or above since 1999, the S&P 500's returns in the months ahead have tended to be subdued. Even though median returns were negative over the next 2-3 months, the S&P was still positive most of the time, thanks mostly to the initial readings following the 2002 and 2008 bear markets.

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[Bullitt]

AAII Bears 47% to Bulls 24%, ratio .51 - Leaning bullish and very near a buy.

Quad-Opex keeping markets pinned for now.

[Bullitt]

AAII Bears 49% to Bulls 24%.

CNN gauge back to neutral bearish, barely.

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Sentiment appears to be cooling by both metrics, which is a good thing.

[Bullitt]

The BofA bull & bear indicator at 2.3 vs. 1.9 last week. This indicator is an indicative metric only, used as contrarian indicators to identify market extremes (for informational purpose only, not investment advice).

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https://www.isabelnet.com/bofaml-bull-bear-indicator-2/

[Bullitt]

And bulls just keep disappearing according to AAII. From 34% to start June to 22% to start July.



Reported Date
Bullish
Neutral
Bearish


July 2:
22.15%
31.96%
45.89%


June 25:
24.14%
26.96%
48.90%


June 18:
24.37%
27.85%
47.78%


June 11:
34.28%
27.67%
38.05%


June 4:
34.55%
26.58%
38.87%



May 28:
33.07%

24.80%
42.13%

[Bullitt]

From Argus Research:


The AAII survey shows only 31% bulls and 45% bears. This reminds us of the cyclical bull market from 2003 until 2007. During that bull, AAII got more and more bearish as stocks rose. Individuals started to sense the housing crisis, so the sentiment deterioration was more about the economy and less about the market. Now, individuals see horrible economic stats and large layoffs, which leads to a very bearish survey.

[tsptalk]

2003 - mid-2008

https://www.tsptalk.com/images/mb/071820a.gif

[Bullitt]

Investors Intelligence came in at 57% bulls, 17% bears.

A bit lopsided, but as they state on their site investorsintelligence.com:


We don’t necessarily take a contrarian view to the newsletter writers in our survey. A large part of the time our sentiment readings remain neutral. We consider the norm to be 45% bulls, 35% bears and 20% neutral. However, we do pay attention to extreme readings in both bulls and bears and also to historically significant runs of more bulls than bears. To summarize, advisors are only wrong when you get too many of them start thinking the same thing.

In contrast, this week's AAII came in at 26% bulls, 47% bears. Another week very close to that 50% bear level that gives a contrarian buy signal.

[tsptalk]

Yes, the difference between AAII and II is a little confusing. Our TSP Talk survey has been somewhere in between the two.

https://www.tsptalk.com/sentiment.php

[Bullitt]

RE: AAII reading of 20% bulls. Sentimentraders's comments below.


We've touched on the AAII survey several times in recent months, noting how these investors were not buying into the rally. Far from it. In the past, we've looked at the implied demographics of the survey, and it seems pretty clear that they skew heavily to the older end of the population.

Maybe that's why a massive tech-led rally hasn't excited them as much as rallies in the past. Whatever the reason, such a low level of optimism has rarely been to their benefit.

Backtests show that the S&P 500 has rallied 93% of the time over the next three months when fewer than 20.5% of respondents considered themselves bullish on the market.

We've never seen a rally this large, over this long of a period, and still had so few investors consider themselves bullish.

[Bullitt]

RE: NAAIM

A note from Argus Research


This is only the eighth time the NAAIM has reached 100% (we count clusters as one occurrence). About half the time we exceeded 100%, the market saw decent pullbacks in the coming weeks/months; and half the time, the market kept grinding higher as in early and late 2013 and in late 2016.

[Bullitt]

Doesn't necessarily mean a crash is on the horizon, but sentiment is not in the bargain buyers favor.

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[Bullitt]

Burning hot.

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[bmneveu]

Time for a little cooler?

[Bullitt]

Some of that sentiment was worked off, but still kind of up there. Sell when the market is going down, buy when it's going up....

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[tsptalk]

One channel was broken (red) but perhaps another (blue) held...

https://www.tsptalk.com/images/mb/2020/090920c.gif

[Bullitt]

AAII looking promising - bears toeing that 50 buy line. Most bearish since 5 weeks ago.

Bulls: 23.7
Bears: 48.5

[Bullitt]

Not where the market needs to be right now. I note that it got down to around 45 for June's bottom.

47232

[Bullitt]

AAII: 46 Bears to 24.9 Bulls. Less bulls and more bears than all of August, but still not at that 50 Bear Buy level. I'm thinking next week another push lower to 3100 should do it. CNN gauge saw an improvement as it dropped to the upper 40's.

[Bullitt]

From sentimentrader. Large speculators (hedge funds, trend following alogorithms) are $47B short.

Looks like a good bit of fuel to spark another massive rally like the one off the March low.

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[tsptalk]

Wow, so even large speculators are the dumb money. Who the heck is the smart money? :scratchchin:

[Bullitt]

Generally commercial traders in the market indexes would be 'smart money'. Companies like Black Rock, Goldman Sachs, Credit Suisse, UBS, etc. that are offsetting massive bets or buying futures to maintain their index funds.

But yeah, I hear ya. These guys seem to be as mistake and FOMO bound as everyone else.

[tsptalk]

The OEX put / call ratios used to be a good smart money indicator (probably still is) but Stockcharts.com no longer posts it for some reason.

https://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=2&mn=0&dy=0&id=p12082053026&a=368209147 (https://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=2&mn=0&dy=0&id=p12082053026&a=368209147&listNum=1)

[Bullitt]

AAII came in at 55.8% bull vs 24.9% bear.

Last time numbers were this skewed was January 2018, a few weeks before that February 2018 drop.

[Bullitt]

AAII at 49% bull this week.

Consistent weeks around 50% bull tend to signify a top or near top - but not always. This was the case in Jan 2014, Sep 2014, and Jan 2018. All three saw some kind of correction to the downside.

[Bullitt]

B of A fear chart (below) not telling us anything at this juncture, but CNN is at 86 which either says "don't buy here" or that there is such a flood of assets that continue to come off the sidelines that this reading is okay.

I tend to think this bullishness will peter out in mid-late December only to see another ramp up in January with the January effect.

47860

[Bullitt]

AAII at 43 bull, 22 bear. Ratio this week is 1.98. Ration of 2 or higher is considered bullish extreme.

"What direction do you think the stock market will be in 6 months?"

Bears have dropped steadily every week since late September high of around 45.

[Bullitt]

CNN back to near neutral. CNN is more of an immediate term indicator whereas AAII is a projection 6 months out. AII is still very affected by near term sentiment.

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[Bullitt]

It's all about the extremes on both ends. March to May 2020 saw multiple weeks with bears over 50, a number not seen with such consistency in many years.


AAII members have often kept more than half of their portfolios in stocks even when their collective pessimism about the short-term direction of the S&P 500 index has been comparatively high.

This is not paradoxical. Disciplined investors prevent their short-term outlooks from interfering with their long-term strategies.

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[Bullitt]

AAII, Bulls keep dropping as the market marches higher. Bull/Bear ratio around 1.05, right where we were just before election.

This week compared to the historical average of bulls is around normal, but the bears are 5% higher than average.

https://www.aaii.com/sentimentsurvey?

[Bullitt]

Big jump in bullishness past two weeks, 37.4 to 47.1 today. Bearishness has also dropped 35.6 to 25.4.

We really haven't seen a good pullback since late September and since then, bullish readings have been quite elevated at levels higher than any seen in over two years. It's a government policy rally and participants are happy as long as the government continues to stimulate or talk more of it.

[Bullitt]

AAII, even less bears this week, but if the poll was taken today that would surely be higher.

Not sure where to post this, but here's how markets behave 1st year post election. Correction, then rally? February 2021 was an up month though. Full moon this weekend sometimes marks a turn.

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https://jeffhirsch.tumblr.com/post/633975654708396032/presidential-election-anticipation-is-keeping-us

[James48843]

AAII, even less bears this week, but if the poll was taken today that would surely be higher.

Not sure where to post this, but here's how markets behave 1st year post election. Correction, then rally? February 2021 was an up month though. Full moon this weekend sometimes marks a turn.

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https://jeffhirsch.tumblr.com/post/633975654708396032/presidential-election-anticipation-is-keeping-us

Here is why this one is different:

All those other “1st year Dem’s” have been with new people forming a new government. This time Biden has enough experience to hit the ground running, and has already gotten many of his policy changes that he can do by executive order already issued, and many of his people settling in to the places needed most. I think he’s going to be much quicker on jump starting the economy- if he can just get the 1.9 trillion jumpstart through. That should bolster the markets in the next month.


Sent from my iPhone using TSP Talk Forums (http://r.tapatalk.com/byo?rid=74921)

[bmneveu]

48533


If I'm reading this right, 1st year Dem bottoms out at the end of Feb / beginning of Mar, then its pretty clear sailing from there. And that's where we are today!

[tsptalk]

Off topic, but related, the seasonality chart for February did a pretty good job as well of forecasting direction.

https://www.tsptalk.com/images/mb/2021/022721a.gif
Chart provided courtesy of www.sentimentrader.com (https://www.sentimentrader.com/)


March is similar with an even more pronounced difference between the first and second half of the month. I'll post that in Monday's commentary (http://www.tsptalk.com/comments.php).

[Bullitt]

AAII showing no fear at all with bull bear ratio at 1.5. We'll want to see this down at 1 or lower for indications of a turn.

40 Bull to 25 Bear which is still quite bullish.

[Bullitt]

Two things.

1. The chart in post #44 (https://www.tsptalk.com/mb/psychology-of-trading/7489-investor-fear-chart-post652674.html#post652674) shows a flat/choppy market from May until August for the first year of a Democratic president.

2. CNN Fear/Greed index is at 30 right now which is around where it was in late October until the election.

If this bull market is still intact (and all indications appear it is) then chances are this is the beginning of a good buying opportunity similar to that of September to November 2020. Low can always go lower, and trying to pin a bottom is a fools game, but those who like high flying PE stocks can get 'em a whole lot cheaper today than a few months ago.

[Bullitt]

AAII comes in at 40 Bulls, 20 Bears, which is a low bearish number.

Mostly just data mining here, but early April brought a decent sell signal with 51 or so Bulls and 20 Bears. Would selling have been the right move? Probably not since the market has been trending sideways since April with a small spike higher. AAII continues to indicate a sideways trending market which makes sense. I can't imagine there being as many market participants this summer with the reopening.

[Bullitt]

Funny how so many were "looking for a dip to buy" the past few weeks. Here it is, yet fear reigns supreme. Don't follow the crowd.

49997

[Bullitt]

Finally, a non-boring reading in the AAII.

Bulls at 22, lowest since July 2020.
Bears at 39, lowest since October 2020.

Ratio of .57 which leans bullish.

[Bullitt]

Bears unchanged, Bulls +7% to 29%.

According to AAII


*Pessimism is above average for 8th time in 10 weeks
*Pessimism remains near the top of its typical historical range

[Bullitt]

Bulls 28.1, Bears 40.7

Bearishness has not been this high (three weeks now) since October 2020.

[Bullitt]

AAII at 46.9 Bull, 27.8 Bear.

Highest bullish reading since December 10, 2020, lowest bear reading since September 9, 2020. I'm thinking all those newly minted bitcoin bulls (ETF: BITO) had a little something to do with the wildly bullish sentiment this time around.

[Bullitt]

AAII at 26.7 Bull, 42.4 Bear.

Getting close to a buy signal at 50% bear.

[Bullitt]

AAII 21% bull, 47% bear. Lowest bull reading since July 2020, highest bear reading since September 2020.

[Bullitt]

AAII 26.5% Bull, 43.7% Bear.

Last week was a bear reading of 52.9%, the highest since around September 2020. Same with the bull reading, lowest since September 2020.

CNN fear and greed not yet at an extreme.

It looks like we're one more washout away from a good buy signal.

[Bullitt]

Here's that second shot lower, and it's saying now's the time to be in the market. Will the market be up next week? Who knows, but favorable chances that returns will be very good one year out when readings hit these numbers.

AAII 23.4% Bull, 53.7% Bear.

Last week hit 19% Bull.

https://twitter.com/ISABELNET_SA/status/1496810193098842114

[Bullitt]

AAII 16.4 Bull 59.4 Bear. This is the highest bear reading in a year and actually the most bearish reading in over six years. Coupled with such low bull readings, this is bullish for the market.

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[Bullitt]

Pretty much all sentiment indicators remain bearish (contrarian bullish), but if we're due for a bear market, then all those sentiment indicators are out the window. Unless sentiment absolutely craters in capitulation, it really doesn't mean much. AAII has been throwing big buy signals since January and none have stuck.

In 2008 there were "buy" signals the whole way down and plenty of bounces, but every bounce was met with increased selling. Today marks the seventh time since late January that the S&P 500 was up by 2% or more and failed to follow through with anything significant. That isn't bull market behavior.

[Bullitt]

CNN fear gauge at a "9" right now. It hit "8" last week at the lows. We're getting somewhere, but taken with everything else, it's anyone's guess when a bottom will arrive.

[Bullitt]

AAII 21% bull, 56.9% bear.

AAII scores it as slightly bullish, and I'd bet we'd have a more bullish reading if this poll was taken at 0831 this morning.

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[Bullitt]

Yesterday was a 93% NYSE downside day where 93% of all volume was down. Most often those lead to additional 90% downside days which eventually lead to a capitulation type selling. There can't be any capitulation until we break the recent lows from a few weeks ago. Once that happens, we're going to want to see a 90% upside day. This is all very similar to the IBD method where a follow through day is used after multiple days of stable behavior to include five up days.

This isn't March 2020 where it turned in one day. Bottoms (and tops) are a process though in hindsight it will all appear so obvious. Right now signs point to additional selling ahead (break of lows) due to heavy selling volume and weak up volume, momentum continuing to weaken, and rallies fizzling out.

[tsptalk]

Grasping at some bullish straws -- a possible positive divergence:

New highs - new lows on NYSE.

https://www.tsptalk.com/images/mb/2022/061022e.gif
https://www.tsptalk.com/images/mb/2022/061022d.gif

[Bullitt]

Interesting chart. I wouldn't have thought we'd have such a divergence here.

With a VIX of 27 this is just a slow motion grind lower. We've yet to see a selling panic (4 or 5% down days). It's almost like speculators think the fed put is still in play and that there's nothing to worry about.

[tsptalk]

Getting worse but the new lows this morning in the indices is still not producing more new lows in individual stocks on the NYSE as we saw in May -- yet, anyway.

https://www.tsptalk.com/images/mb/2022/061322a.gif


Grasping at some bullish straws -- a possible positive divergence:

New highs - new lows on NYSE.

https://www.tsptalk.com/images/mb/2022/061022e.gif
https://www.tsptalk.com/images/mb/2022/061022d.gif

[Bullitt]

WSJ is calling for the beginning of a new bull market after a 20% rise off the lows for the S&P 500. Price can do wonderful things for sentiment.

Most sentiment indicators are elevated bullish which is normally a hold or sell, but with a possible start to a new bull, those indicators don't matter so much as sentiment is often higher at the beginning of a bull.

[Bullitt]

AAII

35 Bear
32 Bull

First time in 12 weeks there were more bears than bulls. Pendulum starting to swing to excessive pessimism from excessive optimism.

[Bullitt]

Bull-bear spread is at lowest level since March. All the net gains in the S&P 500 since 2015 have come when this has been above 20%.

It takes bulls to have a bull market and right now they are heading for the exits.

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https://twitter.com/WillieDelwiche/status/1706997582486995142?

[Bullitt]

AAII week ending 9/27

Bulls: 27.8%
Bears: 40.9%

Most bears since May 10.
Fewest bulls since May 24.

[Bullitt]

AAII week ending 10/4.

Bulls: 30.1%
Bears: 41.6%

Bears streak continues and is now at a 5 month low.

[Bullitt]

AAII week ending 10/11.

Bulls: 40%
Bears: 36.5%

Nothing but noise here. AAII indicates that the October 2022 low is solid. Nothing has come close to those bearish numbers which were the highest in many years.

[Bullitt]

The rally off both October lows (the 2023 October low, and the original 2022 October low) has triggered a return of Euphoria reminiscent of what happened at the start of some of the most significant cyclical bull markets in recent decades.

59530

Weekly S&P500 ChartStorm - 26 November 2023 (https://www.chartstorm.info/p/weekly-s-and-p500-chartstorm-26-november)