Friday Market Sentiment
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The surveys of the individuals and bloggers are starting to show a lot of volatility. Two weeks ago they were in the blue, then back to the green, and now in the blue again. This is a sign of uncertainty about what is happening in the market. No doubt they are inspired by the gradual base-building in the market, but scared by the gloomy newspaper headlines. Or maybe they are just scared by the newsletters they receive. The writers are still a pessimistic bunch, and this works in favor of stocks. These writers still have their readers in cash on the sidelines waiting for the next opportunity to buy. Although the individual and bloggers sentiment isn't as favorable as it was, the newsletters are still quite gloomy and this works in favor of higher stock prices in the weeks ahead.
Thanks to Market Harmonics for these free charts. The percent of bulls is just now starting to cross above the percent of bears. This is a bullish event as money starts to flow into stocks while stock prices are still at very favorable levels.
Brent is reporting that the insiders have stepped up their selling to a level that is no longer as favorable for stocks. Is the highly favorable window starting to close for buying stocks at depressed prices? I'm new to insider sentiment so I will leave it up to Brent and Investor's Intelligence to interpret. II tends to looks at the 8-week trend of insider activity to smooth out the extremes. Here is what they say.
"The 2008 insider data remains positive with only a slight slow down in their recent buying in reaction to the market advance. That is to be expected but if it continues it will end the positive signals we have taken from their action this year. In general the insiders remain optimistic for more market gains and the slight increase in their sales is not close to the heavy selling that marked the last quarter of 2007." [April-25-2008]
This chart continues to favor stocks. A break above 1400 for the SPX would be quite favorable. The SPX would then join the industrials and transports in breakouts above important technical levels adding important evidence that the market is regaining its health.
While this Bob Brinker 60-day moving is moving down from such a high level, you would generally expect stock prices to be moving higher. In the past, this indicator has worked really well as an intermediate term indicator, but it did fail us miserably in the fall of 2007. Brinker prefers to use it as a longer term indicator, showing that the market remains in a primary uptrend despite the gigantic selloff since last summer. Bottom line: this indicator is quite favorable for higher stock prices in the weeks ahead.
HPT (Comment this)