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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 691.79+0.6%4:00 PM EST
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To: Crimson Ghost who wrote (66658)1/12/2001 12:10:06 AM
From: Psycho-Social   of 99985
 
I concur that the Investor's Intelligence survey should not be taken too seriously. I've spent 22 years studying the Market, with emphasis on a contrarian approach. For three months this year, I was employed as a Research Assistant and did nothing but study contrarian indicators, getting historical info and studying the long-term changes that the various indicators go through. While I have the II historical data on hand-drawn graphs going back to the 70's, most of my other historical data is in spreadsheet format with graphs. All contrarian indicators show some long term changes, but the II Survey, which was never that great at highs, and always lagged the Market by 2 to 3 weeks is definately a broken indicator. It bottomed between -20 and -36 (bulls - bears) a number of times at Market lows between 1987 and 1994, but once it achieved widespread attention ceased to function properly. It's never gotten below -11 since then!

I use the average of the Bullish %s from Market Vane, Consensus and the AAII Survey to identify intermediate highs and lows. 30% or lower Bullishness is generally an intermediate term Buy. I use Jake Bernstein's Daily Sentiment Indices on the S&P and Nasdaq, plus my own sentiment indices to identify short term highs and lows. In the latter half of December they all came together to issue a consensus Buy signal.
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