Monday, August 11, 2008

Investor Sentiment Update

The market put in a very solid day today. It didn't close at its highs, but the fact that it could rally on a Monday after a huge Friday rally was impressive.

Oil dropping was the catalyst for the big, early rally, and when oil started coming back late in the day it looked like the rally might be in jeopardy of completely fading. But the market bounced again in the last hour, and closed on a strong note. Oil finished down slightly to $114.60.

I feel like the energy stocks are getting oversold and are due for a relief rally, as well as the ag complex.

Retail stocks led the way all day, with the retail index finishing +4.75%. Banks bounced back, and the bank index rallied +3.16% for the day.

As for investor sentiment, here are some updates:
  • The Investor's Intelligence survey showed more bears than bulls for the 8th straight week, a rare occurrence
  • The AAII survey registered more bears than bulls for the 10th time in 11 weeks
  • The Market Vane survey showed bulls back up to 42%, but this is still well off the 55% reading in mid-May
  • The public short ratio hit another record at 73.1%; there remains a huge amount of short interest in this market (one day the mother of all short-covering rallies will begin - MOASCR)
  • The 10-day put/call ratio rose slighly for the week to 0.94; in terms of recent readings, this is pretty neutral. If it gets down into the mid-80s, it will be time to get defensive again


Post a Comment

<< Home