Tuesday, July 01, 2008

Hulbert Speaks !

One useful sentiment indicator that I like to use as a check on my own assessments is Mark Hulbert's stock market newsletter sentiment index which he has been constructing since 1997. It measures the average portfolio allocation, long or short, to stocks by the market timing newsletters Hulbert follows. You can read his latest commentary on this indicator here.

According to Hulbert the index is currently at - 35.9 %, the lowest reading in almost 8 years and in particular a lower reading than was seen at the bottom in March and at the bear market lows in 2002. The fact that market timers advocate a record setting net short position is a very bullish omen and reinforces the observations I made yesterday.

18 comments:

Anonymous said...

Carl... you see... pointless keep calling bottom... bottom just felt out this morning... Like I said before the final bottom probably won't come in until we hit around 1080 and dow break 10,000... Yes in the mean time, we will have bounces, but not to 1500...

Anonymous said...

I think you are correct we will bounce soon.

Butin a credit contraction, something we very rarely experience, sentiment will remain negative for quite some time to come.

Anonymous said...

Carl my guesstimate is we will see some guesstimate soon claiming "1250 is support for S&P and once we get there I expect an initial rally to 1270 which will take the market to 1500." :) Good luck

Anonymous said...

How does one factor in the potential for Israel and Iran going to war?

Could things get more negative before the bounce?

Jack said...

Due a bounce. Market Extremely Oversold.

McClellan Osc. at extreme low as well.

Sometimes the most profitable trade is the hardest trade to pull the trigger. Looking for a long etended reversal wick today.

Jack

Anonymous said...

looks as if the sentiment is failing you again. New lows this morning 1272 busted. What is next level of support that will be broken??? does bear market mean anything?

Anonymous said...

hulbert has been terrible the last year with his 'good market timers being bullish'

Win said...

For the person posting anonymously and saying "like I said before..," how do we know who you are and what you said? Take a stand and put your name out, and preferably your reasoning - as Carl does - so we can track your record. As we can track Carl's record. Every post he's made is on this site.

Win said...

Carl,

I continue to see a strong inverse relationship between Oil prices and the SPX. If Oil is indeed going to 160, I don't see an SPX rally.

Conversely, I do see an SPX rally when Oil falls. But in order for Oil to fall, I think SPX must first fall big - to correctly reflect the impact caused by Oil at 150 or 160.

So - where does this lead us. The most obvious place is this. There has to be a tipping point - where Oil stops going up. As and when we reach that, the market may stop going down. Be it $150 or $160.

Until then, no matter how bad sentiment is, there can be no sustainable rally. Please address this question/comment. Others have asked it as well.

Thank you for your invaluable help and support.

Anonymous said...

i disagree with win,oil rallying could cause the market to rise a flood of money would come from the sidelines to buy all the oil related stocks and push the market up untill oil hit its peak. I have also heard that a drop in oil futures would make money flow out of futures and into the big names like XOM,CVX,COP. You would also see names like VLO,TSO rise causing the markets to rise so either way oil rising or falling would cause the market to rise. Just my opinion.

Trend-Signals said...

Hi Carl,

We have a CIT day during this week and today market action looks good.

Good luck

JOSE said...

I think that anonymous' point that oil dropping/raising could be irrelevant...the XLE looks like it can rise much higher...looking at a point and figure chart for the XLE it imply's a rally to 118 from its current price. Additionally that sector (oil, oil service) has overtaken the financials in terms of weight on the S&P. So as money comes out of the CRUDE FUTURES, it can go into the equity, and won't necessarily portend a crash in oil stock/stocks. The reason for this thinking is that CRUDE will find a floor, the companies will know where that floor is, and thus, begin to efficiently use the HUGE capital they're sitting on, and will continue to accumulate. Lets not forget these companies make a fortune @ 50,60,70 dollars, at 100 they make even more, but if 100 becomes the floor, the companies know what they're working with in terms of cost...additionally the refiners can earn a wider crack spread, including the "integrated" co's, thus yielding better performance and higher prices. So Lower OIL can mean a higher market, but Higher OIL can mean a higher valuation for OIL/OIL service stocks, and mitigate the downward momentum in the broader indices...I HOPE.

Tom D said...

I know that internut investment site posters are not considered to be valid sources of information, but I haven't seen such negativism everywhere since February/March 2003.

Anonymous said...

Jose is correct that when oil tops out, the XLE will continue to perform (and probably do even better). A decline in crude will open up the crack spread and refiners (who have been crushed this year) will drive a rally. Even with the financials staying in the toilet (a 100% possibility IMHO), the SPX will rally due to the weight of energy in the index. Long XLE/short XLF has been the trade for a long time and it will continue to work for at least a few more months.

Anonymous said...

tom,

It is blog traffic not the comments thats the tell, tim knoght , and brett steenbarger have commented on this. Steenberger just said yesterday that traffic is no where near the jan and march lows.I wonder what carl would say. Helen Miesler always says good bottoms come from breaks of support because the spook everyone and cause a ton of pain. That would be the best thing to set up a nice rally. This means any short term bounce is an opportunity to short or go to cash . One poster is calling for 1080 and i can see that but the 1175 zone is the next fib level along wit hthe 10700 support on the dow.

Anonymous said...

Win , give us a break!!Carl is a big boy and can defend himself. As long as its not offensive or insults someone else we all must feel comfortable with criticism. And I guess that's why Carl keeps posting comments.

A different anonymous

Anonymous said...

i think oil will struggle a lot to overcome the 144 treshold and if it does , i expect a wall of offers coming in to push prices back to 80-81, all the market news notwithstanding. Gd trading all ! MC

JOSE said...

Anon responding to TOM:

I noted the same pattern in postings recently on one of carl's dailies...It was just the day before that I was on Barry Ritholtz' blog and he noted that he was expecting a rise in blog comments/page hits in the recent sell-off, but it wasn't happening...I noticed the same on Carl's site and even wondered if he simply wasn't approving the comments...a day or two later, more that 40 comments hit the site and the numbers have staying quite high(IMO)...compare the last week to the weeks since..05/19/08...