One of my favorite indicators for identifying potential corrections in the stock market has just triggered the 4th extreme reading of below 0.60 on the Put-to-Call Ratio in what I refer to as a cluster of readings (a series of sub 0.60 readings that occur in relative close proximity without a substantial correction while the stock market is moving higher with each successive reading). $CPC daily Dec 16th The Put-to-Call ratio is a sentiment indicator which is calculated by dividing the number of traded put options by the number of traded call options. Like most sentiment indicators, this is [...]
A detailed look at various measures of bullish or bearish sentiment among stock market participants & how to use that data to predict major turning points in the stock market. This video also highlights several recent extreme bullish sentiment readings & well as a look at the historical performance of the stock market following similar periods of extreme bullish sentiment.
Here's the updated SPY chart with the AAII bull/bear spread extremes. Yesterday's survey results came in once again above the +18% extreme threshold for the fourth consecutive week. For those new to the site, I've discussed how these extreme bullish and bearish readings often precede significant corrections and rallies in the stock market. Those previous posts which discuss the methodology and include a long-term chart for a visual of the track record of this sentiment indicator can be found by clicking here and here. A few important things that I will continue to reiterate regarding this signal is that 1) It [...]
Today's release of the weekly AAII Sentiment Survey shows the third consecutive extreme bullish reading with a 26.5% spread on the Bull-Bear Spread. In updating this chart in real time following the extreme readings over the last couple of weeks, I am pointing out each extreme (18% or higher) reading as they occur. However, keep in mind that as discussed in the original post on this buy/sell indicator: "When I come across a cluster of consecutive or nearly consecutive extreme readings, I place the arrow on the last extreme reading. Although every extreme reading did not mark a major inflection point [...]
On January 10th of this year, I posted one of the more reliable buy & sell signals that I follow. I would highly encourage those interested to revisit the notes from that post which can be viewed by clicking here. As luck (or lack thereof) would have it, the Jan 10th sell signal that was given the day of that post was only one of two of the 14 sell signals given since the bull market began back in March 2009 that did not pan out (not including the two current sell signal that just triggered which mark the 15th & [...]
I've recently discussed two of my most reliable longer-term sell signals: The AAII Bull/Bear Spread Extremes as well as the $NAAD simple trendline buy/sell indicator (click on either to see the previous charts and discussion). In the last update to the $NAAD indicator about a week ago, I pointed out that a sell signal was likely to be triggered soon, which it has as shown in the updated chart below. Regarding the pending AAII Bull/Bear Spread signal, we were waiting for the Bull/Bear Spread to moderate back below the 18%+ extreme level for at least two consecutive weeks, which as the [...]
I wanted to make an update to the recent post made on January 10th that highlighted the track record of major buy and sell signals based on extreme bull-bear spread. As was discussed in that post, bullish and bearish extremes (+/- 18% or higher) often come in clusters, as the sentiment extremes can persist for weeks at at time before manifesting in the form of a trend reversal. For those who have not read that post, it can be viewed by clicking here. That recent chart reflected the extreme buy & sell signals through the reporting date of January 10th [...]