Sunday, June 19, 2011

Sentiment Data - Wow!

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The problem I have with sentiment data is that there is so much of it now and the data is often conflicting. One survey shows too many bears and one shows too many bulls. It gets confusing. Thus, rather than write about how one data point is more meaningful than another, I simply present the following chart stolen from Market Harmonics for what it is: one of many pieces of sentiment data (albeit a very interesting one). Here is the daily NASDAQ Sentiment Index from mid-2004 thru Friday's close, according to Market Harmonics:

The lowest daily sentiment reading on the NASDAQ in at least 7 years! I was surprised by this. Reading around the blogosphere this weekend, things seem very gloomy and bearish on balance, which is my unofficial and non-scientific read on the general sentiment out there.

Me, I am bullish here for the short to intermediate-term, as I believe topping is a process. I don't like common stocks as an investment and haven't for years. Gold is my only long term investment. But I am not ready to short equities just yet and I wouldn't dream of opening a new short position on common stocks right now in my trading account, as I see better opportunities ahead. Keep in mind that the sentiment data above exists and yet we are not even in a confirmed cyclical bear market in the NASDAQ yet!

I am speaking in trading terms, not investing terms. Nothing moves in a straight line. The fundamentals for the global economy are horrible, but they have been for a while when one looks at the "big picture." This "big picture" information is useless when trading and only helps longer term investors that need to focus on what asset classes are likely to come out the other side intact and with a gain on an inflation-adjusted basis (ahem, um, GOLD!!!).

The same gloomy sentiment seems to exist in the Gold mining sector, which I think presents a buying opportunity. More detailed information and specific trading recommendations are reserved for subscribers.

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