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Strategies & Market Trends : Technology Stocks & Market Talk With Don Wolanchuk

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To: da_cheif™ who wrote (34083)	10/15/2008 7:50:32 AM
From: gregor_us	Read Replies (1) of 208198

US Market Timing Advisors Sentiment 15 October 2008 By Mike Burke & John Gray Overview Markets remain incredibly active with a horrendous down move last week dragging most indexes down to five-year lows on Friday morning. This week began with the largest point-rally in history. In between, there were concerted government efforts to get the credit markets functioning again. The mood shifted from panic, and lots of forced sales to meet margin calls, to sudden optimism and a new fear of missing a major upmove. Columbus Day effected the distribution of many newsletters, so this week’s survey does not count the extreme weakness into the end of last week or the huge rally on Monday. The increasing concern for the state of the markets lowered the bulls to 22.4% from 25.3% last week. That is the fewest bulls since 25-Nov-88 when they were just 21.1%. Last week we noted the bulls at a fourteen year low and now they are down to a twenty-year extreme reading. When the markets were rallying in mid-August the bulls reached as high as 40.7%. The bears were just fractionally lower at 52.9%, compared to 53.0% a week ago. That was the highest reading for the bears since December 1994. The difference between the bulls and bears was -30.5%, an even stronger bullish reading from last week’s -27.7%. This is the most positive reading since June 1970 when it was also -30.5%. That was a market basing period that was followed by a 70% gain over the next two years. Advisors classified as correction rose to 24.7% from 21.7% a week ago. This group is mostly bullish but they expect an intervening market retreat before the rally begins. They suggest buying on weakness and some have been hinting that they thought the markets were near a bottom. Advisors often shift from bearish to correction before they are ready to make a bullish commitment. As we have been saying, sentiment is still bullish for stocks and odds favor higher prices down the road. Most averages peaked a year ago when sentiment showed the bulls at 60.2% bulls and only 19.6% bears. Those were extremely negative readings (way too much optimism). The current reading of 22.4% bulls and 52.9% bears is pretty much the opposite of that. Tops occur quickly as traders are quick to sell but bottoms usually form slowly as traders take a lot on convincing before they are ready to buy.

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