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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Psycho-Social who wrote (71159)	3/4/2001 12:09:32 AM
From: Shack	Read Replies (2) \| Respond to of 99985

Hi psysomarper. I agree that the AAII survey is a "broken" indicator. However I find almost ALL sentiment indicators are screwy. They are also very fickle. As I'm sure you know, the premise as to why these sentiment indicators work is simply that if you're bearish...you're likely out already and won't be selling. If you're bullish, you've bought in already and won't help push up the market further. But as a result of the subjectiveness of the surveys, I now only follow indicators that tell me what folks are ACTUALLY doing with their money. They are Put/call ratios, Rydex ratios, VIX and most importantly, the small speculator position in the S & P futures contract. Put/call ratios, VIX and Rydex have all been indicating rising bearishness but IMHO are still too bullish. Obviously there is some subjectivity here as well. HOWEVER, The small spec position in the S&P futures contract should be alarming for the bulls. They are at a 5-year record long position and historically have NEVER been long at a bottom. This is very bearish. It is the main reason I remain comfortably 100% short. Cheers Shack