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Strategies & Market Trends : Point and Figure Charting -- Ignore unavailable to you. Want to Upgrade?

To: OX who wrote (25299)	4/6/2001 5:26:04 PM
From: Atin	Read Replies (1) \| Respond to of 34811

After reading: thestreet.com I lost a lot of confidence in the chartcraft sentiment numbers . . . the relevant parts: "Investors Intelligence has been publishing the sentiment index for 40 years. It is a limited sentiment sample, based on a subjective reading of market newsletters. An editor -- the same one has been doing it for 20 years -- reads the newsletters and decides whether they are bullish, bearish, calling for a correction or neutral. Only the first three numbers are reported; the neutral market letters are thrown out. That means that whatever sentiment number is reported is at least somewhat exaggerated because it is given as a fraction only of letters with an opinion. A large number of neutral letters at any given point in time could create an important distortion. Hougan also discovered that the process has no rigorous way to deal with market letters that are both bullish and bearish at the same time -- that is, those that are recommending buying some stocks while simultaneously recommending selling or shorting others. Gray told Hougan that a letter with this ambiguous stance would be treated as bullish because it was at least recommending some stocks. That could lead to an important bullish distortion right now because a common view among pundits nowadays is to be bearish on the Nasdaq but bullish on the Dow."