Financial history doesn't repeat itself, but it often rhymes. You can't be stupid enough to trade off anything I say.... I'm lucky they let me out of the straight-jacket long enough to trade.

J. P. Morgan

"Sell down to your sleeping point"

Sunday, December 20, 2009

More sentiment

Well... look who the chart thief is this time.[OptionsSpeculationIndex[2].png]

I do have to mention how much I hate this indicator, since it lags 3-10 days, based on how it's "Calculated". As I mock the Calculation, I do have to mention that my own sentiment indicator is "Calculated" in the same way, and has fewer samples, but also allows me to re weight the data.

I also want to give a word of caution about how with low volume, some of the Put Call Ratios, have a higher chance of sampling error.

Like I've said... SENTIMENT IS OFF THE CHARTS. I'd add the Rydex to this, but again that sucker lags 7 days, and has such huge weekly swings, it's hard to find it reliable Other, than for hind site.


Tony said...

Great rundown of the sentiment indicators!!

By my calculation, the Davis Sentiment Index (tm) is pegged at 9.7 this morning.

Before reading your comments at the end, I was about to extol the virtues of the put/call ratio since this seems like the most objective... i.e., it's the ACTUAL number of people putting their money where their mouth is.

What is the volume of the "speculation index" and sampling error? Scientists use a statistical P value, for percent risk that the value was arrived by chance. I'm no statistician, but that would be interesting.

Excellent post!

Eric said...

Put/ calls are great for Short term contrarian indicators And can show Climax. But IMO one still has to put that in a Holistic vision of things.
Also on that "Speculation Index" +/- 14 days.
But it seems like the volume is "All Options", that is a sizable sample, even at X-mas.

and if I had any sense I'd build my own version and keep an eye on it. It did fuck you at the bottom here in 2009

The good and the bad on my indicator this morning.

over the weekend, many of the people with their head up their ass on Friday, Pulled it out. So Many people are less bullish this morning than they were on friday.(maybe that means we bounce 1 day, or 3 or half the day or not.)

Now the good thing is that,for most of "Them" Even seeing the indicators, they still can't sell this fucker. To me that is a good emotional indicator, when all the numbers are Flashing Red, and they still don't believe it.

I would present that if you were looking at "all the indicators" , you just have to create a MEAN. 8 of 10 charts say X, you don't go with the 2 that say something else.

But I'd also add, that it's not the charts, it's how "they" react to them. There is nothing better than a Chart that says the Opposite of what the person talking about them is saying.

Some of these were included in a post at clusterstock quoting another trader blog, Clusterstock had a different interpretation than the blogger did. And somehow both were wrong. I think it was that the AAII Bear could go to 10, so it wasn't that Extreme. Of course looking at the chart, it hasn't been 10% in 5 years... so, I'm not holding my breath for a 10% AAII Bear, as a sell indicator.

Damn... I don't know who runs this blog... but they have great taste in music!!

Bla bla bla...

but I'd at least be Sell Biased.

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