June 25th Blogger Sentiment Poll

This week there are still more bulls than bears!

Blogger Sentiment Poll Participants:

24/7 Wall Street (-) Abnormal Returns  Ant & Sons (+) Alpha Trends  Bill a.k.a. nodoodahs (+) Big Picture  Bloggin' Wall Street  Capital Chronicle  Carl Futia (+) Confused Capitalist  ContraHour  Controlled Greed  Crossing Wall Street  Crowder Blog  CXO Advisory (+) Fly on the Wall (+) Dash of Insight (+) Day Trade Team  Daily Dose of Optimism (+) Daily Options Report  Deal Breaker  Dr. John Rutledge  Elliot Wave Lives On (N) Fallond Stock Picks (-) Fickle Trader  Global Economic Analysis  Hedgefolios (-) Information Arbitrage (N) In The Money  Daily Blog Watch  Jack Stevison (-) Kirk Report  Knight Trader (N) Learning Curve (-) MaoXian  ChrisPerruna.com  Michael Comeau  Millionaire Now (N) Naked Shorts  Peridot Capitalist (N) Quant Investor (N) Random Roger's Big Picture (-) SeekingAlpha  SelfInvestors  Shark Report (+) Sigma Options  Stock Advisors  ShadowTrader  Tech Trader Daily  Trade King  Trader Feed  Trader Tim (-) Ugly Chart  Wall Street Folly  WindRiver Blog  Wishing Wealth

Comments

[Bill a.k.a. NO DooDahs]

This week, there were 35 non-disclosed votes, as opposed to last week's 37 non-disclosed votes. Of the 19 voters that disclosed both weeks, the down action of last week changed the minds of five of them. Fallond shifted from bullish to bearish and Knight Trader shifted from bullish to neutral. Meanwhile, Bill aka NO DooDahs! shifted from neutral to bullish and Peridot and Quant both shifted from bearish to neutral.

This means that only three disclosed voters believe in the buying the dip.

Since the poll went from 50% bullish to only 35% bullish, that means a whole bunch of bloggers responded to the market by shifting from bullish to bearish or neutral, based on one week's negative action. That sounds like dumb money to me.

[Mark Young]

Any trend follower has to be shifting Bearish here. Given that there are still 35% Bulls here, and rising Bullishness in our polls on traders-talk, and that there's no bearishness showing in the options, and my private survey of amateur traders shows 75% Bulls, I have to think we're heading lower still.

There's not enough fuel to hold this market up until Friday.

Mark

[Bill a.k.a. NO DooDahs]

"Any" trend follower? How many do you know, and what methods do they use to determine "trend?"

[Mark Young]

"Any trend follower" was short for "virtually all decent short or intermediate-term trend followers."

I know about 1000 trend followers. Maybe more (they frequent our site). Most will use some variety or permutation of moving averages, or trend lines, and some will confirm with breadth or something else. Some will just watch a chart. All those methods say we're in a down trend, unless your time horizon is quite long.

It doesn't mean that everyone does it that way, but most do generally. It also doesn't mean that they'll always be right, but it's pretty obvious that the market is going down. daily highs and daily lows are lower than the last.

So, if you've personally got a different type of system, fine. But most traders with a shorter time horizon will say that we're in a down trend. If they have a discipline that follows trend, then they will be Bearish.

We've done a lot of technical damage here and yet the amateurs at Rydex (and elsewhere) aren't worried at all. That'll probably change if and when we take out the lows. We'll have to see. I don't see this Blogger Poll as showing the type of sentiment one would expect at a bottom, though I'll be watching closely.

BTW, I'd say we're ALL dumb money from time to time.

[Declan Fallon]

Hopefully not 'too dumb'

;)
DJF

[Bill a.k.a. NO DooDahs]

I suppose none of those 1,000 or so use a 3 ma crossover system.

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&st=1997-06-22&en=2007-06-22&id=p98669161967

You might try surveying those 1,000 or so trend followers as to their systems and signals.

It's pretty obvious YOU think the market is going down.

My signals have trend-following and mean-reversion components, and are bullish as of yesterday's close. My short-term system is mean-reverting and said "buy," so I did.

We'll find out soon enough. Check back in a month!!!!!!

[Bill a.k.a. NO DooDahs]

Or is 20/50 with 200 confirmation "too long a time horizon?" Sorry for the double post, but I forgot to ask that ...

[Mark Young]

A month?!?!?!

I'll likely have made three trades in that time. Cover, go long, and go back short. LOL!

I'll say I can see some trend following methods that haven't turned down officially (but if we don't find our feet today on the S&P, most of those will turn too), but most of those are too slow for most intermediate-term players. If your "trend following system" works for you, fine, but most would agree, we're in a down trend now. And, I might add, most would agree, you're bottom picking here, not trend following--you're buying weakness, not strength. That's defensible, btw, in a Bull market.

I'll also tell you we're still in a Bull market and sentiment--my particular field of expertise--says that the ultimate top is not in.

Sentiment also says that we've got some more pain to come, in all likelihood.

Good luck to you--your buy would have me sweating, though I might join you tomorrow.

[Mark Young]

Bill,

Yes, your 20-50-200 is too long. It makes you more of an investor (longer term) than a trader.

Nothing wrong with that, either. I guess my criticism of you would be your evaluation of others (pollees) who likely have a much shorter time horizon than you.

I mean, my time frame is intermediate term based upon summation, cumulative breadth, and the daily and weekly MACD's (except that I fade the daily MACD for at least a day or two), and of course, sentiment, and I'm up nicely in my shorts. I can take them off and I may today, but the trend will be clearly down by my and most folks' work.

[Bill a.k.a. NO DooDahs]

The distinction between "investor" and "trader" is illusory. Unless one buys for the stream of cash flows from dividends or coupons, one is a trader only – because one is watching the market price of the asset. If selling is EVER part of the plan, you are a trader.

There are a few participants with shorter trading horizons than mine, and a few with longer. Regardless, the poll is for "a month," and to change a month-long opinion en mass to bearish based on one week is silly, Monty Python-like silly.

Trend is in the eye of the beholder. It's still up, depending on your measuring stick. Chart it daily, no. Chart it weekly or monthly, hell yes, it's up. Moving averages? Testing the 50 dma, below several shorter ones. Above the longer ones. MA crosses? You think 20/50/200 is "too long" but clearly it is an effective way of following longer trends and that is still bullish. Pick shorter ones and you get different answers.

Based on what I do for a month-long look, this week switched me from neutral to bullish. Today's down action has me thinking about going from 98% long to using margin to get longer. Is that counter-trend? Depends on what you think the trend is! If my measuring stick is longer than yours, the trend is up and I'm buying a dip.

Now, if you're using a shorter measuring stick than I am, would you buy a dip on your timeframe, and still call it "trend following?"

[Mark Young]

Bill,

Two points, Lower highs and lower lows is the most simple definition of trend. That definition has us in a down trend right now. Period. If this is a modest, short-term correction, it's probably OK to buy it, and if we're in a larger correction, it's not.

Now, longer term time horizons that don't take that into account may well subject the "trader" to a bit larger draw downs than many would like. Even folks with a 1 month time horizon. And, I'll say categorically, that there's nothing wrong with using shorter-term measures to predict prices out 30 days. 3 full weeks ago, my weekly measure said, "look for lower prices for a while". As often as not, that'll be 3-5 weeks. At one single point in time, too, many good measures will flip from a "higher for the next 30 days" to a "lower for the next 30 days" reading. That's not silly, that's just the way it works.

Now, in answer to your question,

"Now, if you're using a shorter measuring stick than I am, would you buy a dip on your timeframe, and still call it "trend following?""

The answer is no. No one who uses anything like the time frame that I use would do so. Of course, I don't HAVE to follow the trend. In fact, I've resolved to NOT follow the trend when looking for bottoms. I've got some of the best bottom picking tools out there. I don't need to be so conservative.

Anyway, we are cluttering the comment board pretty well this week. I'm going to give it a rest. If you want to discuss this further with me or some pretty smart technicians, feel free to trot by traders-talk.com. I'm OEXCHAOS and I try to respond to everything addressed to me there.

Best,
Mark

[Bill a.k.a. NO DooDahs]

Enjoyed the verbal sparring!

[Bill a.k.a. NO DooDahs]

Hey, Mark! are we in an uptrend yet?