Monday, October 22, 2007

Extreme Bearish Sentiment and Other Ideas to Start the Week

* Extreme Bearish Sentiment - The NYSE TICK captures intraday sentiment, assessing at each minute the number of stocks trading at their offer price minus those trading at their bids. My Adjusted Cumulative TICK compares the current 1 minute TICK readings with the average 1 minute reading over the last 20 trading sessions and then adds these readings to arrive at a single daily total. When the total is below zero, we have more selling sentiment than the 20-day average; when the total is above zero, we have more buying sentiment than the 20-day average. On Friday, we had a five-day average Adjusted TICK of less than -400. That's only happened on 53 other occasions since 2004 (N = 952 trading days). Five days after the extreme selling sentiment, the S&P 500 Index was down by an average of -.17% (26 up, 27 down). That's notably weaker than the average five-day gain of .19% for the remainder of the sample. Our earlier post noted a bullish edge after five down days, but when the bearish sentiment is extreme, we don't see this bullish edge.

* Time Frame Selection - Trader Mike updates his links with interesting posts on selecting a time frame for trading and recession talk from CAT.

* Trading Education - Chris Perruna with some excellent links re: managing your money and stock market education.

* Market Summaries - The Shark Report tracks market internals and big winners/losers on the day.

* Market Fear - VIX and More tracks the fearfulness of Friday's market.

* Where Are The Earnings? - Bespoke Investment Group tracks earnings by market sector--interesting patterns.

* Frontier Market - Random Roger takes a look at Kazakhstan and sees something interesting.