Thread: Using Sentiment as a LT Entry/Exit Point

It's a tough call but I think the herd is right around that trough area between depression and hope but leaning more towards hope. Here's my reasons for the herd being in a current state of Hope:

1. It's ancient history now that Buffet is buying which may be brining some investors back into the market alone. Money Magazine this month said 'Buffet is buying' at least 5 times.
2. Conventional wisdom also states that markets are subject to an end of the year 'Santa Rally' which may have formed a short term bottom for stocks.
3. The transition to the new President will occur in only a few weeks.

Non opinionated Emotional Outlook of the Herd -- Hope.

For the reasons you mentioned plus the urge to "keep your chin up" and to "put on a brave face" even though you know the truth because the herd has seen their own latest financial statements.

The percentage of stocks in the S&P 500 trading above their 50-day moving average remains at a paltry 3%. Perfect for a contrarian perspective.

Originally Posted by Bullitt

It's a tough call but I think the herd is right around that trough area between depression and hope but leaning more towards hope.

I really hope you're right, Bullitt. Because when I looked at the chart before reading your comments, I was thinking that I'm not sure we've been through "Despondency" yet. In fact, I was thinking that maybe we are finally past "Panic" and possibly at "Capitulation." I like your position placement better!

Lady

Originally Posted by XL-entLady

I really hope you're right, Bullitt. Because when I looked at the chart before reading your comments, I was thinking that I'm not sure we've been through "Despondency" yet. In fact, I was thinking that maybe we are finally past "Panic" and possibly at "Capitulation." I like your position placement better!

Lady

I'm kinda like Lady on this "Despondency", but if the Big 3 gets bailed out then hope can spring eternal. I think we can get a Christmas bump especially if congress has some sort of stimulus package, but over all I'm still leery with credit card problems and more ARM resets in 2009. If the Big 3 gets bailed out and we get a pre Xmas Stim package, then we may have a rally thru January.

CB

I really think we're still back at capitulation, ready to slide into despondency with this next leg down. (which may come only after a fairly strong rally)

The capitulation is in the mindset that it is too late to exercise some control over the situation by harvesting some cash.

The herd has been trained well these last 20 to 30 years. They still have no idea how bad it COULD get. They really are too comfortable in the "knowlege" that the worst is behind us.

I really haven't heard anything approaching despondency yet.

Most comments I hear are:

"I don't care to even look at my balance"

"I really haven't lost anything until I sell"

"Oh well, I still have x number of years before I retire"

Sentiment is the clearest indication of why investors fail to keep the gains they make in bull markets. It has them buying more heavily at market tops and selling in despair near market bottoms. There are so many folks now bearish that is the most since December, 1994 - right before the 1990s bull market was about to accelerate to the upside in a big way. I'm buying as much as possible - I just had a buyout and I'll use that money to buy more equities.

Birchtree! I moved from 100% G to C a few days ago! I tried to buy in around 850 the S&P but George W. Bush had a press conference I wasn't aware of and the mkt turned around and I got in at about 911. Hope that isn't a bad omen! Anyway now the mkts around 859 today and I'm staying in for the long haul...up or down! I thought that was the idea; when things seem and are really bad we are to start buying in again...contrarian view. Higher unemployment lags the mkt....53,000 jobs at Citigroup...who needs them now anyway. Staying in and staying put! I agree with your writeup!

Birch (my B&H preacher man!),

Looks like you have a new convert - mick.....Just hide the Kool-Aid and you should get a few more....

You gotta love those bounces at 8100/840 levels.....I think the pockets will dry up soon and support will be lost.


But (I)'ve been wrong before~!

FRIXXX...it's not that I wanted to get back in at 911; but 850; however since I'm in I think I'll stay awhile! It it drops more which it may...so what! I don't want to be out and chasing the slow rise up. I'm retired and got the time. It's a crazy mkt from day to day! The 2 trades or 3 make it somewhat difficult so heck w/it...I'll stay put for awhile! I prefer Gatorade!

Originally Posted by XL-entLady

I was thinking that I'm not sure we've been through "Despondency" yet. In fact, I was thinking that maybe we are finally past "Panic" and possibly at "Capitulation."

Okay, so we weren't quite as far along the curve as I was thinking. Because what I'm hearing and reading since 4 PM EST today sounds like "PANIC" to me! So we're not at capitulation yet. Maybe tomorrow?

Lady