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II Insight

13 October 2011

An inflection point?

Welcome to the October edition of Investors Intelligence Insight. Markets are now attempting to hold their ground against the prevalent downtrend, and we take a look at what some of our indicators have to say on this potential inflection point.

Certainly, we are at a potential watershed. Benchmark government bonds have lost their upside momentum as the flight-to-quality rotation becomes exhausted. Meanwhile, the major indices are attempting to complete medium-term base formations, as can be seen on this weekly candlestick chart of the S&P500.

Whether this rally will have the legs to carry it forward to the year-end remains to be seen. However we would highlight that its is occuring against a background of very low readings on our Advisors Sentiment indicator (see more below) - a condition that has led major rallies for many years.

On other matters, we have two seminars from the Fullermoney team scheduled for next year - our colleagues in the  Investors Intelligence London office. In 2012, Eoin Treacy is taking his two-day workshop on behavioural technical analysis to both coasts. The Chart Seminar is scheduled for San Francisco on the 16/17 April and New York on the 23/24 April. Read more below.

 

Regards, Mark Glowrey - Investors Intelligence (London office)

www.investorsintelligence.com

NYSE BP rebounds
One of the best-known of II's proprietary indicators is the NYSE Bullish Percentage. Here's what Investopedia has to say on this market-timing tool:
 
The NYSE Bullish Percent Index was invented by the estimable market technicians at Chartcraft in 1955 (now known as Investors Intelligence). The NYSE Bullish Percent Index is calculated by reading either a buy or a sell signal from the point and figure chart of each of the 2800+ stocks on the NYSE each evening. (For a review of the P/F technique take a look at this article on Stockcharts.com.) The value of the index represents the percentage of stocks listed on the NYSE that signal a buy. For example, if 2100 stocks signal buy and 700 signal sell, the value of the NYSE Bullish Percent Index is 75. Since it incorporates every NYSE listed company, it is easy to see how useful this index can be.

Read more: http://www.investopedia.com/articles/trading/04/080404.asp#ixzz1aeGJe0nP
 
And what is it telling us now? Tarquin Coe writes:
 
The NYSE Bullish % indicator reversed up in the second week of October from just above oversold. The reversal raises the status to “bull alert” which means that investors should be preparing to go long the market. The green light will come on a “bull confirmed” signal which will be printed at 42%, a break above the 31st August high. Subscribers will be advised on the day of the signal via our US Hotlines service.
 
The indicator is a graphical representation of the percentage of NYSE stocks on P&F buy signals and reflects the internal health of the market. The greater the participation, the more a rally can be trusted.
 
 
 
Advisors Sentiment indicator in favourable position

It is not often that our Advisors Sentiment Indicator becomes deeply oversold, but when it does, investors should take note. The major rallies of the last decade have all started during periods of severely depressed investor sentiment.

Readings (as measured by Bullish Advisors minus Bearish Advisors ) now stand at -12%, equivelent (and slightly below) the readings seen in 2010.

The question now is - will we see a sharp reversal (as 2010) or a more complex bottoming process as recorded over 2008/09? Our analysts will be monitoring this vital indicator over the weeks to come.

Are you a subscriber to the Advisors Sentiment indicator? Get updated weekly by our analysts. More details here: http://www.investorsintelligence.com/x/us_advisors_sentiment.html

Please note - The full dataset back to 1963 is available for financial models, quants, black-box etc. IP restrictions apply.

International Index breadth

We have looked at the NYSE breadth in the section above. II US stock service offers a wide range of sector and index breadth indicators.

However, If you would like to monitor II's full set of breadth indicators for the major international indices, our International Index Module provides both individual index breadth and "breadth of indices". The latter is a tool where we monitor the breadth of index groups (i.e. how many indexes in a region are in uptrends/downtrends. Here's what the European group looks like.

II's International Index service is great value  at just $250 a year. Subscribers benefit from:

  • Daily Hotline with Chart of the day, analysis and long/short trades etc
  • Online Chart Library
  • A full set of breadth indicators for the major global indices.

More details here: http://www.investorsintelligence.com/x/international_equity_indices.html

Behavioural Technical Analysis

With 40 years of investment and trading experience, David Fuller of www.fullermoney.com has developed a unique system, which he named Behavioural Technical Analysis.  This approach combines theories of crowd psychology with factual charting disciplines, generating a set of investment principles that work in all market conditions.  The Chart Seminar encapsulates David's analytical development and considerable investment and trading experience. Since 2008, Eoin Treacy, David's colleague and co-editor of Fullermoney has picked up the baton. Eoin has taught the techniques established by David to investors around the globe. This year saw Eoin take the Chart Seminar on a sell-out tour of London, Singapore and Australia. Nest year, the seminar will be coming to the US. 

What will you learn? Eoin reviews candlestick, point & figure and bar chart theory, translating chart patterns into what people are thinking as they buy and sell.  The insights give delegates a practical framework for generating profits when technical conditions are favourable and staying out when they are not.

In addition, the sessions are interactive, stimulating and the examples of behavioural psychology often amusing.  This is as much to do with the quality and experience of the delegates as Eoin's own wealth of trading and investment experience.Here's what some of the past delegates have to say:

"Thoroughly enjoyed TCS in Sydney.  Even after following the service pretty closely for nearly 10 years, I managed to take an enormous amount from the two days.  I wish I had attended years ago."  T.S., Private

“Excellent and relevant course.  Broad spectrum of delegates helped in covering a wide area of interests.  Never dull.” N.M., Rabobank

"The Chart Seminar is an absolute prerequisite for any person active in the markets."  G. F., Standard Chartered Bank Australia

You can read more about The Chart Seminar at www.fullermoney.com. For further details, or to book, either take a look at the registration form, or contact Sarah Barnes in the London office on +44 207352 5435.

And finally

Best regards to all our subscribers from the team in both the London and New York offices. If you have any questions, or need help processing a subscription, please do not hesitate to contact us as follows:

Analysis queries: analysis@investorsintelligence.com

Subscription queries: support@investorsintelligence.com

Alternatively, call Grace Ann Iomazzo (US office) on (914) 632 0422 or Sarah Barnes ( UK office) +44 20 7352 5435.

We look forward to hearing from you.

Disclaimer
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This report has been produced and compiled by Investors Intelligence, a division of Chartcraft Inc, and is provided for information purposes only. Under no circumstances is it to be used or considered as an offer to sell, or a solicitation of any offer to buy. While all reasonable care has been taken to ensure that the information contained herein is not untrue or misleading at the time of publication, we make no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time Chartcraft and any of its officers or employees may, to the extent permitted by law, have a position or otherwise be interested in any transactions, in any investments (including derivatives) directly or indirectly the subject of this report. Also Chartcraft may from time to time perform other services (including acting as adviser or manager) for any company mentioned in this report. The value of securities can go down as well as up, and you may not get back the full amount you originally invested. Derivatives in particular are high risk, high reward investment instruments and an investor may lose some or all of his/her original investment. If you make an investment in securities that are denominated in a currency other than that of US dollars you are warned that changes in rates of foreign exchange may have an adverse effect on the value, price or income of the investment. The investments referred to herein may not be suitable investments for all persons accessing these pages. You should carefully consider whether all or any of these are suitable investments for you and if in any doubt consult an independent adviser. This report is prepared solely for the information of clients of Chartcraft who are expected to make their own investment decisions without reliance on this report. Neither Chartcraft nor any officer of Chartcraft accepts any liability whatsoever for any direct and consequential loss arising from use of this report or its contents. 

US Sentiment holds the key
The Advisors Sentiment Survey continues to provide advance warning of major market turning points.  
The analysis and data regularly feature in the international financial press as a key indicator of market reversion.
Examples of these articles can be found on Barrons, NY Times, and Investor's Business Daily.
Read what CNBC said about the biggest switch in sentiment for 7 years.
Want to know more?  Click here  - and you can subscribe for just $335 annually.

Historic Advisors’ Sentiment data since 1963 is also available; please contact us for further details.

"This is an exceptional service and should be in every traders toolbox.
Thank you for the great service!" C.C.
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