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Strategies & Market Trends : Investor sentiment surveys - a technical indicator
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To: Sam Citron who wrote (25)4/5/1997 2:38:00 PM
From: Q.   of 167
 
Sam, you have an interesting idea that I hadn't thought of.

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This does sound like it might work well when a correction actually does materialize. However, you would still need a mechanism to get you back into the market if a correction doesn't materialize, as it didn't after Christmas of 1992? when the bullish sentiment got so high. Maybe a two-criterion condition would do the trick: go back into the market after the bullish sentiment goes below N% or M weeks after the sell condition disappears, whichever comes first. That would give you 3 free parameters in the optimization.

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Actually, Barrons merely reports the results of 4 different surveys conducted by other organizations, including the AAII survey. The other three organizations appeared to be businesses. They have their phone no. listed just below the report in each copy of Barrons, so it is posible to reach them. But I haven't tried. If somebody wants to find out if they have historical data in electronic format, that might be quite useful.

I looked through a very limited history of Barrons at the public library (Dec. 1996 - April 1997) and I noticed that the "Consensus" survey exceeded an 80% bullish level in February, a couple of weeks before the AAII survey hit its peak of over 60%. So maybe the Consensus survey would be a good predictor. The other two surveys in Barrons did not appear to show as significant a peak in February or early March as the AAII and Consensus surveys did.
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