Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Trend Forecast 2024 - 15th June 24
Gold Price Consolidating at High - 15th June 24
NVIDIA Stock Market: Price Prediction for the Future - 15th June 24
When Will the Boom/ Bust Rollercoaster End? - 15th June 24
Stock Market Trouble Lies Ahead. Are You Ready For It? - 15th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24
Bitcoin Trend Forecast, Crypto's Exit Strategy - 31st May 24
Zimbabwe Officials Already Looking to Inflate New Gold-Backed Currency - 31st May 24
India Silver Imports Have Already Topped 2023 Total - 31st May 24
Gold Has Done Its Job – Isn’t That Enough? - 31st May 24
Gold Stocks Catching Up - 31st May 24
Time to take the RED Pill - 28th May 24
US Economy Slowing Slipping into Recession, But Not There Yet - 28th May 24
Gold vs. Silver – Very Important Medium-term Signal - 28th May 24
Is Gold Price Heading to $2,275 - 2,280? - 28th May 24
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

A look at Stock Market Psychology

Stock-Markets / Trader Psychology Apr 17, 2007 - 12:52 AM GMT

By: Clif_Droke

Stock-Markets

The past five days were bullish, overall, for the stock market. That isn't surprising given the level of bearish sentiment we saw in last week's AAII investor sentiment survey. This week's AAII poll, released Thursday, showed a slight increase in bullish sentiment (41%) over bearish sentiment (38%). That's not enough of a disparity between the bulls and the bears to cause any overt worries in the immediate term, but it's enough to slightly increase our caution.

The still rising dominant internal momentum indicator for the NYSE, the 200-day HILMO index, should act as a strong underlying support for anything unusual that gets thrown at this market in the coming weeks. The interim trend remains bullish.


In the immediate term, however, investor psychology isn't as strong as it was earlier this month. The Growl-o-Meter is a proprietary indicator for measuring investor psychology in the stock market on an immediate-term basis (i.e., 5-10 days). The readings for the Growl-o-Meter are taken each week and assigned a numerical value from 1 to 5. The values of each number on the meter are shown below:

1 - Very bearish
2 - Mildly bearish
3 - Neutral
4 - Mildly bullish
5 - Very bullish

The meter readings are assigned each week based on the following four components: 1.) AAII Investor Sentiment Survey; 2.) In-house market psychology poll conducted by www.clifdroke.com ; 3.) Pessimistic or fear-laden headlines in the leading financial newspapers; 4.) ARMS Index reading for the current week.

The indicator is one way of gauging the stock market's psychological profile for the current week. When the readings of the meter are high (4-5) it favors a bullish trading stance. Lower readings (1-2) mean extreme caution is advised. The current Growl-o-Meter reading is strictly an immediate-term consideration (i.e., 5-10 days). The very latest reading shows that market psychology has pulled back from last week's bullish reading to a neutral reading (see graph below). It therefore wouldn't be surprising to see an increase in resistance in the very short term.

Isn't it interesting that on Friday, April 13, the S&P 500 index completely recovered its losses following the Feb. 27 panic sell-off? This of course was preceded by the NYSE Composite index a few days ago (which also made a new all-time high on Friday). It also further proves the point that an event-driven selling panic is always completely retraced, a message we've been pounding ever since the panic started.

Both the NYSE Composite index and the Emerging Market ETF (EEM) made new highs on Friday, April 13. This underscores the fact that the dominant trend for the stock market is still up in the intermediate-term, notwithstanding the possibility for a short-term correction.

Speaking of the EEM, in earlier March I mentioned that Emerging Markets ETF was sending a bullish signal since the correction following the Feb. 27 sell-off. EEM has since recovered to new highs, led in large part by the shipbuilders. We talked about the EEM showing a positive divergence (i.e., higher lows) in March while the S&P 500 (SPX) made a lower low. This positive divergence in EEM told us two things: 1. the correction in the SPX would soon reverse since EEM has been a reliable leading indicator for the SPX; and 2. the world economy is still expanding contrary to the doomsayers.

Another good proxy for global economic expansion are the stocks of shippers and ship building firms. To get an idea of how well the shippers have been doing of late, check out the symbols of the following stocks. Keep in mind these aren't necessarily formal recommendations but just references: TNT, ALEX, SFL, and ISH. The bottom line is, as goes shipping, so goes the global economy. This means it will pay to keep a watchful eye on the shipping stocks in the months ahead for the *real* pulse of global economic strength or weakness.

 

By Clif Droke
www.clifdroke.com

Copyright ©2002-2007 Clif Droke - Publishing Concepts
Clif Droke is editor of the 3-times weekly Momentum Strategies Report which covers U.S. equities and forecasts individual stocks, short- and intermediate-term, using unique proprietary analytical methods and securities lending analysis.  He is also the author of numerous books, including most recently "Turnaround Trading & Investing."  For more information visit www.clifdroke.com


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in