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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: LLCF who wrote (3521)	9/4/2003 1:06:08 PM
From: Eva	Read Replies (1) \| Respond to of 4907

SMART MONEY ON SI ?? Date: Thu Sep 04 2003 11:16 trotsky (Investor's Intelligence polll) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved this week: 55.50% bulls, 18.20% bears - the 16th week in a row with bulls above 50% and bears below 20%, one of the longest, if not THE longest such skewed runs in history. interestingly, it is this datum which more than any other keeps the bears engaged and hoping for a big decline in the traditionally weak seasonal period. likewise the most recent AII poll with 62% bulls and 16% bears has produced yet another pretty extreme reading. who is betting against this? believe it or not, the 'smart money'. the 'fearless forecasters poll' , generally regarded as a 'smart money' measure has had bears outnumbering bulls by at times huge margins since the week of April 7. yes, that's 20 weeks of ultrabearish 'smart money' sentiment, contrasting with the supposedly not-so-smart money betting on the bull over the same period. what can one conclude? it looks almost like a 'hook' to me...the smart money guys got blindsided by these polls, and to their detriment forgot to examine the positioning data, which paint a completely different picture. as i keep mentioning, the strongest stocks and subsectors in this market , i.e. the technically most convincing issues, all sport enormous put open interest vs. call OI, as well as the largest short interest ratios. what the rally in the market has been and is all about is the unwinding of these overly pessimistic bets, with a nice 'wall of worry' backdrop ( everything from higher interest rates to high energy prices to Iraq contributes to the WoW ) . it all fits very nicely with the theory that the market will probably continue to exhibit strength in the near to medium term ( with the occasional hicc-up of course, and ignoring the possibility of exogenous shocks of the unpredictable variety ) , but ultimately succumb to the bear once again at a later stage - probably when all this short covering fuel has finally been burnt. as far as i can tell, this process has alreay begun...recently, several biggger cap stocks have seen short interest drop for the first time in months, and calls are beginning to be added with greater conviction. alas, the process can hardly be characterized as having run its course. the downside bets are still way too numerous and large, a surprising development considering that this has been the by far most convincing bear market rally to date.