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Insights From Investors Intelligence Data

Guest Post by Tom McClellan

Investors Intelligence survey data
October 31, 2014

Investors Intelligence has been publishing their survey of investment advisors and newsletter writers since 1963.  The initial presumption was that when all of the smart guys started leaning one way, then that was the way to lean.  But they quickly found that when even the smart guys are all convinced one way or the other, the market was more likely to move the other way.  Since then, the Investors Intelligence spread between %Bulls and %Bears has become a favorite contrarian sentiment indicator for a lot of people.

The chart above shows that bull bear spread.  Investors Intelligence surveys approximately 200 newsletter writers and investment advisors, and classifies them as either (1) Bullish, (2) Bearish, or (3) “Correction”.  The chart above portrays the spread between the percentage of bulls and that of the bears.  You may notice that all of the readings for the past 2 years have been positive, meaning that there have been more bulls than bears.  We have to go all the way back to 2011 (not shown) to find an instance when the bears outnumbered the bulls, and that was right after a post-QE2 19% decline in the SP500.

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NFTRH & Biiwii Reminder

NFTRH is where the more technical content will be.

Biiwii is where the more wordy content will be.

Just robotically continuing with these reminders for a while as things settle in.

Thank you.

Around the Interwebs…

  • While I am on the subject and now that the damage is being done, let’s excerpt some of NFTRH 314, beginning with the charts that have kept us very aware the bad technical situation that could not be spun any other way…

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Pivotal Events

Guest Analysis by Bob Hoye

pivotal.events
Click for full report

FOMC Cites Job Gains?

Fed Announces End to Bond-Buying, Citing Job Gains  –New York Times

Just a week or so ago one of the Fed’s three most celebrated hawks jumped the mic with a ‘shucks ya know, we could always delay the end of QE’ routine as the stock market plummeted.  They don’t make hawks like they used to.

So what does the FOMC really mean, ‘job gains are good so we are ending QE’ or… ‘phew, that was a close one but the market took the Bullard bait and is back near the highs so we are ending QE… for now’.  I’ll take ‘B’ Alex.

I seriously wonder how people other than promoters in the media and the financial services complex can continue to fall in line behind this transparent stuff.  Maybe it is not really people after all but instead a bunch of connected black boxes, dark pools and other such robo systems simply programmed, without feeling, to follow the code.

As if its ears were burning, here comes SlopeCharts again with the truth…

sp500

But… It… Is… What… It… Is… Yes, I get it.

Despite the impression that this racket is morally bankrupt and dishonest, it has also been very bullish for various asset classes since Greenspan first alarmed people by taking interest rates all the way down to below 1% in 2003.  Now the robots running the Fed have taken it a step further and institutionalized ZERO percent policy (AKA financial Homicide upon savers), which according to the FOMC will continue on indefinitely.

Look at the chart above and the long journey from when Greenspan began eating the seed corn Volcker left.  And now here we are, with a strong economy, a ridiculously bullish stock market, ZIRP-infinity, etc. and some clowns would have us believe that QE is terminated because of strong jobs.  What, last week when James the Hawk spoke to the contrary jobs were not strong?  Please.

In the very best light, they are day trading information and talking out of too many sides of their gaping orifice, and it sucks.

Stock Market Myth #8

Guest Post by Robert Prechter & EWI

Don’t Get Ruined by These 10 Popular Investment Myths (Part VIII)

Interest rates, oil prices, earnings, GDP, wars, peace, terrorism, inflation, monetary policy, etc. — NONE have a reliable effect on the stock market

You may remember that after the 2008-2009 crash, many called into question traditional economic models. Why did they fail?

And more importantly, will they warn us of a new approaching doomsday, should there be one?

This series gives you a well-researched answer. Here is Part VIII; come back soon for Part IX.


Myth #8: Terrorist attacks would cause the stock market to drop.

By Robert Prechter (excerpted from the monthly Elliott Wave Theorist; published since 1979)

I assume this is what economists mean when they say that something unexpected such as a terrorist attack would cause them to re-evaluate their stock market forecasts. At least, I doubt they mean that a terrorist attack would cause them to revise their estimates upward. It seems logical that a scary, destructive terrorist attack, particularly one that implies more attacks to come, would be bearish for stock prices.

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Good Riddance to QE…

Guest Post by David Stockman via Stealthflation

Good Riddance To QE—-It Was Just Plain Financial Fraud

QE has finally come to an end, but public comprehension of the immense fraud it embodied has not even started. In round terms, this official counterfeiting spree amounted to $3.5 trillion— reflecting the difference between the Fed’s approximate $900 billion balance sheet when its “extraordinary policies” incepted at the time of the Lehman crisis and its $4.4 trillion of footings today. That’s a lot of something for nothing. It’s a grotesque amount of fraud.

The scam embedded in this monumental balance sheet expansion involved nothing so arcane as the circuitous manner by which new central bank reserves supplied to the banking system impact the private credit creation process. As is now evident, new credits issued by the Fed can result in the expansion of private credit to the extent that the money multiplier is operating or simply generate excess reserves which cycle back to the New York Fed if, as in the present instance, it is not.

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4 Reasons Why…

Today MarketWatch treats us to…

Four reasons why the market will rally for the rest of 2014

Aside from the fact that I hate it when people talk in absolutes (because there is no such thing as a guru who can really predict absolutes) the writer, a CFA and regular Fox Business and CNBC guest tells us why stocks will rally all the way to the end of 2014.  Wow, two whole months?

Before I even read the article let me just say that the irrational fear became extreme earlier this month and while we anticipated the bounce, its strength is now pushing through the top end of expectations.  Got to love the markets, and that ploy of putting a supposed Fed hawk, James Bullard, in front of a mic to go on about QE extension the moment the market took a decent correction.  Right there belies vulnerability and desperation.

Anyway, to the article written by the CIO of the aptly named Global Guru Capital…

He highlights how sentiment is still way too pessimistic out here…

1) The Market’s Manic Mood

Americans haven’t felt this bad about their country since Jimmy Carter’s malaise years. According to a recent POLITICO poll, 64% of respondents believe things in the United States feel “out of control” right now. Exactly half said the country was “on the wrong track.”

Yes and do you know why?  It is because the majority have not participated due to the inequality and inequity of the current recovery, born of policy and aimed at those who already have capital and have assets.  What do ‘Americans’ have to do with this?  It is all about keeping asset owners whole.  Next…

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Currencies

Guest Post by Ino.com

Currencies Snapshot
Symbol Last Change %
US DOLLAR INDEX 85.387 -0.025 -0.03%
POWERSHARES DB US DOLLAR INDEX 22.690 -0.030 -0.13%
US Dollar/Canadian Dollar 1.11586 -0.00084 -0.08%
Euro/US Dollar 1.27395 +0.00046 +0.04%
JAPANESE YEN Dec 2014 0.009253 -0.000002 -0.02%
SWISS FRANC Dec 2014 1.0567 +0.0002 +0.02%
US Dollar/Hong Kong Dollar 7.75505 -0.00218 -0.03%

CURRENCIES

CURRENCIES: The December Euro currency closed up 29 points at 1.2741 today. Prices closed nearer the session high and saw more short covering in a bear market. The Euro bears still have the firm overall near-term technical advantage.

The December Japanese yen closed down 38 points at .9252 today. Prices closed nearer the session low. The bears have the firm overall near-term technical advantage. A bearish pennant pattern has formed on the daily bar chart.

The December Swiss franc closed up 20 points at 1.0565 today. Prices closed near mid-range today on short covering. The bears have the firm near-term technical advantage.

The December Canadian dollar closed up 45 points at .8933 today. Prices closed nearer the session high and hit a two- week high today. The bears still have the near-term technical advantage.

The December British pound closed up 6 points at 1.6128 today. Prices closed near mid-range on tepid short covering. The bears still have the firm overall near-term technical advantage.

The December U.S. dollar index closed down 0.106 at 85.450 today. Prices closed near mid-range today. The greenback bulls still have the overall near-term technical advantage.

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