Monday, September 20, 2010

Market Sentiment

Too much doom and gloom out there?

A new issue of Robert Prechter's The Elliott Wave Theorist came out this weekend with some striking facts about current market sentiment:
(1) Mutual fund cash holdings are at a record low of 3.4%;

(2)  The DJIA annual dividend yield is at 2.7%, lower then it was in 1929.  The S&P dividend yield is at 2.1%, right where it was at the 2000 and 2007 market tops;

(3) The Daily Sentiment Index, a shorter-term indicator, is at 83% bulls.
My own observation is of a massive wave of commentators on CNBC banging the table for bargain stocks and pee-in-their-pants bullish forecasts for the S&P six months out. 

We trade the dominant trend around here, which not surprisingly has been UP.  But it is important to keep an eye on the bigger picture and befriend caution from time to time.  This may be one of those times.



Anonymous said...

Add to that

per Tyler Durden,17 straight weeks has seen retail investors pulling their money out of mutual funds

market volume remains very low

Everyone now knows the market is a rigged game
and is staying away.

retail investors have moved their money into bonds ,which is where they will get crushed.

market sentiment among retail investors now is totally different than what it was during the bubble building years of 2005-2008

The game riggers are having a hard time getting the sucker investors to put their money back in.

Despite this
they engineer the market up and up,
its all just numbers.

when it gets to the top..... you sell, and it becomes cash in your account.

Sounds like Prechter is still trying to explain his prediction

while the government just keeps pulling the levers from behind the curtain

and the phony market keeps going up.

keeping it simple

owning gold and silver miners

select biotech

a little bit of oil and

and thats it.

the rest(70%) in cash.

to buy more gold and silver miners upon a serious correction

Anonymous said...

If you really believed that you would be in the market riding the up and up and not in cash.

Anonymous said...

Uranium? You have to be kidding right...

oexcash said...

Off topic -
I noticed that you'd fiddled w/ Taylors Xyber9 method in the past. Did oyu find it ueful?

Anonymous said...

"If I really believed that i would be in the market riding the market up and up and not in cash ....."

I'll put it this way,
1) I Am in the gold,silver, the miners, a little oil, less and less right now as it looks like its dropping still...uranium ,yes, because my newsletters recommend it and its been hard watching it this summer.

biotech because its the wave of the future in medical advancement. also has been hurting this summer.

and the rest in cash, as a strategy, waiting to buy bargains in the miners upon a big correction. this is strategic and the correct way to play. as opposed to what you are implying that I should be fully 100 % invested in my stocks right now?? theres no intelligence in that concept. I bought first positions a 1/4 size holding in various miners.

what do you do when you make a first buy ? you go all in? good luck with that .

I choose to go in gradually. so I still have 70 % cash.

Uh, I guess you dont understand investing. thats ok. but thats my explanation. I would be sort of happy to see a real correction, one more good correction in the miners and metals, that gives us a good opportunity to buy strong into the big dip.

Thats where I would buy my second tranche in everything I like .