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Investor Sentiment: Sentiment Leads Price

thetechnicaltake's picture




 

Current market sentiment remains
neutral to bullish.  The “dumb money” indicator is neutral while the Rydex
market timers remain overly bullish (and this is bearish).  Corporate
insiders are showing no real inclination to “buy the dip”.  I am still of
the belief that better buying opportunities are ahead and will be at lower
prices; this is an opinion I have shared in these comments for months
now.  I would
expect the great unwind that started last week to end up in a situation where we
have too many bears.  This will be our bull signal.  What is not
often appreciated about investor sentiment is that it generally leads
price.  After all, investor sentiment is just a reflection of investors’
opinions about the market, and it is investors who make the market.  From
this perspective, investors have been leaving the market, and they have been
right to be bearish.  At some point, this will be the consensus opinion,
but for now, we are still a ways a way from that eventuality.

{Click on link below to see full report and on charts to enlarge}

Investor Sentiment 6.5.11

 

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Sun, 06/05/2011 - 12:03 | 1341218 Bartanist
Bartanist's picture

I really do not believe your premise.

My opinion, based on experience, is that market sentiment has very little to do with price and that market manipulation is the greatest factor.

One cannot deny that the so called market is not a free market.

1. It is controlled through the system of Specialists and Market Makers. Buyers and Sellers do not trade with each other. There is always a middle man that is a bank or a representative set up by a bank. As a result price is determined by the middle man and their ability to take on inventory and dispose of inventory. They are in the business to make money so unless there are extraordinary circumstances they will always exit at a higher price than they bought, through price control. This explains the ENTIRE concept of "overbought" and "oversold", since it is the middleman and no one else who buys too much or sells too much. The concepts are meaningless in a free market.

2. The big money controls the market, since they control the ability to buy with their big money. And, even though we all know this to be true, the vast majority of price moves are completed using bids and asks of only 100 shares or so. Strange, eh?

Investors HAVE left the stock market. There are no so called investors left. That is because the stock market is not an investment mechanism. The stock market has become and maybe always was a gambling mechanism in which people (who are not insiders to the game) put their money on a bet. That bet is not based on the fundamental strength of the company. The bet is not based on a rate of return. That bet is not on the future growth of the company. This bet is on the direction that the middlemen, big money and their captive, protected insiders will move the market and by how much. Technical analysis is only a study of the of pattern that the middlemen use to manipulate prices to ensure that they make money.

.. and while a rising market is not zero sum game (price is increased and the feeling of wealth is increased .. realizable when one can sell) the vast majority of the game, the crooked casino, is designed to extract money from the gamblers and give the money to the house (middlemen, big money and their insiders).

The ONLY time this is not true is when the insiders conflict with each other ... and as long as there is enough slow money/stupid money to fleece, this will never happen. If the slow money dries up there will be cannibalism amongst the insiders.

Everything the media, investment banks, rating agencies, SEC and other colluding fraud organizations tells people is B/S.

Sun, 06/05/2011 - 13:39 | 1341404 sgorem
sgorem's picture

Excellent reply, although I believe I would've used words to describe the situation as a "sheeple-cluster fucking shearing by unscrupulous, fraudster banksters & Co., along with the steady guidance from our fucking traitorous government". I sugar coated IT dammit, sorry.............

Sun, 06/05/2011 - 12:27 | 1341255 AmCockerSpaniel
AmCockerSpaniel's picture

You don't make one feel better about who they really are, but you do speak the truth.

Sun, 06/05/2011 - 11:55 | 1341211 10kby2k
10kby2k's picture

Why are market players called investors?

Sun, 06/05/2011 - 12:32 | 1341258 AmCockerSpaniel
AmCockerSpaniel's picture

I think we all know the answer to that question.

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