Dividend Yield The Dow Industrial Average has only a 2.7% annual dividend yield, lower than it was in 1929! The S&Pâs yield is only 2.1%. In the past century of stock market history, the only peaks at which the dividend yield indicated more optimism were those of 2000 and 2007. These readings gave us what commentators call the âlost decade,â the worst ten-year return for the S&P ever. Some people think the stock marketâs poor ten-year return is a reason to be bullish. But the sentiment figures show that the majority is still historically optimistic, which is not the way bear markets end.
American Association of Individual Investors (AAII) Poll The American Association of Individual Investors (AAII) poll did show very few bulls three weeks ago, which was congruent with a short term low. But after a three-week rally, the same poll shows bulls right back at the upper end of the historical range. In fact, the current reading of 50.9% is higher than the 48.5% at this yearâs market high in April, and the percentage of bears, at 24.3%, is lower than the 25.3% at the marketâs all-time high in October 2007!
Intraday Trading Index (TRIN) Optimism also shows up in the way the stock market is trading. From May 6 (flash-crash day) until now, 21 trading days have had an intraday Trading Index (TRIN) reading of .25 or lower, and today's (9/17) opening had the lowest reading of the entire period: 0.06! Such low readings indicate buying panics. Only 16 days since then have had a commensurate intraday reading of 4.00 or higher, indicating selling panics. So, investors have more often wanted to buy than sell. This is not how a market gets oversold.
Put/call ratio and Vix Put/call ratios are not at market-bottom levels, and neither is the VIX. You canât make a short term contrarian case here. That doesnât mean the market canât rally. It means you canât legitimately make a sentiment case for a rally.
Bull-Bear Spread The bull-bear spread, moreover, is the widest since May 2008, just before the S&P fell from 1440 to 667 in 10 months. P/E Ratio Many articles are talking about the P/E ratio being bullish. One problem is that so many people are talking about it. Almost no one talks about the dividend yield or the percentage of cash in mutual funds. Even so, the real P/E has merely improved to moderately bearish levels. Most of the neutral readings you see in the paper are based on projected earnings, not actual earnings. But projected earnings have almost always hadâsurprise, surpriseâa bullish bias, so the popular version of P/E mixes hope with reality. Hope is the marketâs problem, not the solution. As noted in Conquer the Crash, P/E is the least useful indicator of them all. People spend far too much time with it. It speaks loudly only a few times a century. The rest of the timeâlike nowâyou can ignore it.
Dow Jones Thread Short CALL continues on daily timeframe. April 26, 2010 top still holding with first SHORT entry the very next day, April 27. Several SHORT entries since then. Initial loading up for the expected loong downtrend is NOW almost complete. I have just ONE remaining SHORT entry to be added. And this will be the 2nd BIG one, the first one being the April 27th entry. When? As soon as my wave 3 sign shows up. What will the sign look like? Large downside bar. But this particular SHORT entry, due to its size will have a closely monitored STOP on 60-min. until I can then leave it at breakeven at a rally hill and then switch to daily for the next hill to change the STOP to. That be the plan.
----------------------------- same 60-min. chart, updated. The trendline is broken. As you can see, the 161.8% guesstimate worked. I've added the blue trendline because it was there before in previous charts I posted a few days ago. This might be breaking now. If this 2nd attempt fails too, I'll go for a 3rd. But the DAILY chart requires no thought-ing at all. That's a clearcut shortie since april 27, 2010 Uploaded with ImageShack.us
I don't know about daily, but weekly chart NDX is in breakout till Xmas, with return to dollar trashing stocks will be going up.
Yea that be the plan. Hi DB. Yes I closed this thread a while's back after you made a complete fool of yourself and then supposedly went on vacation to an exotic location. You have made many additional short entries since the thread's inception at DOW 10,100 all the way up to here! If you want me to reopen this thread I just might if you get your head screwed on straight. You don't have to talk to a preacher to know that the momentum for this move is waning. We have been holding you by the hand to get you through this period DB so you shouldn't be surprised. Your use of sentiment readings is entirely correct today! You interpreted these same readings at 10,100 wrong so it's always wise to be careful. Due to high frequency traders the market is not as straight forward to chart as it has been in the past. Sentiment is important and always go against the HERD. Just this past AUGUST (1 month ago) the readings were 50% bears and only 21% bulls. As I told you then this extreme low reading of bulls was the highest since the March bottom. You were firmly in the MAJORITY then in the bear camp and I was screaming at you. Just one month later and look at the difference! Bulls are now 51% and Bears are down to 24%... and just not very much has changed. We priced in a double dip and took it out but really nor much has changed. That's a huge swing, the biggest I can remember so it's got my attention and thus has me thinking about taking some profits and waiting things out. The funny thing is look at bonds. 93% of advisers are bearish! And everyone is calling Bonds a bubble so of course we must come to terms with the fact that it is not. If bonds go up it's bad for stocks. If bonds are not a bubble then what of gold? Does Gold and the market of stocks ever march happily up together? As a trigger to the upside or downside from here, I'd have my eye on the flash crash trading report due any day. Without that we may be heading into a retrenching period. The S&P 500 broke out! But was not confirmed by the DOW I don't think, sentiment is too bullish for where we are. New investors might have to be shook out soon. Never fear though DB, the Hedgies got to make their year end money or they are going to go out of business! A nice year end rally should come after the elections. Goldman Sachs has looked at this year end period over the last 10 years and come up with a tech heavy rally of 30%! the S&P should be up 15%! On average these rallies start Aug 23 and end Dec 19 and last 118 days. So we'll have to do some math and see how much of that 30% we already have in the book, then we give back off a bit and then finish the pattern. My work indicates we have achieved 10% of this 30% tech move... so 20% UPSIDE awaits!! 10% for the S&P!! Along the way we hope to make money every day while you sit and post about your mythical short position.~stoney