Cramer's Got My Number

rffrydr · Posted: Mon Mar 24, 2008 7:33 pm Post subject: Cramer's Got My Number

Well here's the Madman once again: couldn't help reprint 'cause now he's talking to--at--me. Is this really the "secret consensus"?

HenryTo · Posted: Tue Mar 25, 2008 11:38 pm Post subject:

By the way, that study by Ritholtz is hardly scientific. If one truly wants to gauge newspaper headlines, then any study should be thorough and consistent, such as what BCA has done:

http://www.bankcreditanalyst.com/public/story.asp?pre=PRE-20080311.GIF

Newspaper headlines aside, there are many much more credible statistics showing that most are still bearish on the stock market, as I previously mentioned in my commentaries, such as:

* 10th consecutive month of domestic equity mutual fund outflows. The previous record was 8 consecutive months, right after the October 1987 crash.

* Historically low readings in the ISE Sentiment Index.

* Historically lows readings on the CBOE equity put/call ratio.

* Record amount (both absolutely and as a percentage of domestic equity market cap) of money market mutual funds, or "investable cash sitting on the sidelines."

* Significant amount of reallocation from domestic equities into international equities, fixed income, and alternative investments over the last few years by institutional investors, namely DB pension funds, endowments, and foundations.

HenryTo · Posted: Tue Mar 25, 2008 11:27 pm Post subject:

Using sentiment as an indicator is only a part of it. Like I mentioned, the mainstream media was still very bullish on the USD earlier this year - this was one reason why I decided not to go long the USD at that time.

If one believes that sentiment should not be used for the USD, then you can hardly use it for gold either. Incidentally, the HGNSI (I subscribe to this) also declined dramatically during the summer 2006 correction - topping out at 51.8% on May 12, 2006 (when gold closed at $725 an ounce), and then plunging to a mere 8.93% on May 18th, when gold closed at $693.50 an ounce. A day later, gold plunged to $651.50. The correction wouldn't end until June 20th, when gold closed at $567.00, and once the HGNSI hit 1.8%.

Sentiment is the most reliable at extemes - and with the HGNSI still at 11.5% as of tonight, I still wouldn't bet on gold at this point.

Rubedo · Veteran Poster Joined: 16 Sep 2007 Posts: 168

Incidentally, it seems to me that contrarian investing doesn't work with the dollar.

BTW, according to Hulbert's latest article, it's consistent with thestreet.com's polls where everyone is jumping off the gold bandwagon.

http://www.marketwatch.com/news/story/mark-hulbert-contrarians-continue-bullish/story.aspx?guid=%7B1987E425%2D4997%2D4A1D%2DBCB3%2D1A6D99E48255%7D&dist=hplatest

ANNANDALE, Va. (MarketWatch) -- The evidence continues to mount that gold's spectacular plunge in the past week was a mere correction in an ongoing bull market.
Chart of 38099902
Just take what happened on Tuesday, when gold bullion jumped by more than $16 an ounce. Far from becoming more bullish, the average gold-timing newsletter tracked by the Hulbert Financial Digest reacted by becoming markedly more bearish.
That's a very good sign, according to contrarian analysis, because it suggests that there is a substantial wall of worry out there for the bull market to climb.
Consider the latest readings of the Hulbert Gold Newsletter Sentiment Index (HGNSI), which reflects the average recommended exposure to the gold market among a subset of short-term gold timing newsletters tracked by the Hulbert Financial Digest. The HGNSI ended the day Tuesday at 11.5%.
That represents a decline of 23 percentage points for the day alone. And it is 54 percentage points below where this sentiment index stood as recently as last Tuesday, one week ago.
In fact, the last time the HGNSI was as low as it is today was at the end of this past November, when gold bullion (38099902:
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38099902, , ) was trading for around $785 an ounce, or about $150 an ounce less than where it is today.
In other words, the past week's correction has so spooked investors that they are just as bearish today as they were when bullion was a whole lot lower.
Rapid retreats to the exits are not usually seen at major market tops. At such times, according to followers of contrarian analysis, the typical reaction is to treat any pullback as a buying opportunity. Far from believing that the decline is the beginning of the end, advisers tend to consider it to be the pause that refreshes.
Perhaps the best illustration of this contrarian pattern in recent times is what happened to sentiment among stock market timers at the top of the market in March 2000, just as the Internet bubble was bursting. In the wake of the market's first 10% decline off its all-time high, the average short-term stock market timer tracked by the Hulbert Financial Digest was more bullish than he was at the top.
Now that's stubborn bullishness.
And it's anything but what we're seeing now in the gold market.

Rubedo · Veteran Poster Joined: 16 Sep 2007 Posts: 168

If you want to know about the "Cramer Consensus", just look at his website, thestreet.com's weekly poll. For most of the year, bullish sentiment was very low in the 20 and 30%, similar to other polls like the AAII. However, last week, it shot up to around 45%. And before last week, people were very bullish on gold. It was the number one voted sector in terms of bullishness. But after last week's plunge, people jumped off the bandwagon and voted it number one in terms of which sector they were most bearish on. And I've noticed tons of new articles talking about the commodity bubble bursting.

In terms of nobody is bullish the dollar, I've heard this over and over the past few years that everyone is bearish on the dollar. If you would've went long the dollar everytime you heard that "everyone was bearish on the dollar", you would've lost alot money over the years.

In terms of pessimism on the stock markets, below is from Ritholtz.

http://bigpicture.typepad.com/comments/2008/03/bottom-callers.html

Bottom Callers Run Rampant
Monday, March 24, 2008 | 11:45 AM
in Markets | Psychology/Sentiment | Trading

Last week, I questioned the conventional wisdom which claimed that there was Not Enough Bullish Sentiment?

It seemed that there were plenty of Bulls who looked at the 15% pullback in the S&P500 as an ordinary dip-buying opportunity.

In a moderate recession, an 85 day, 15% drop would likely be insufficient to reflect the changes in both growth and earnings -- much less a deeper, more protracted recession.

The counter-argument is that the Fed has flooded so much cash onto the system, the recession no longer would matters.

Looking from a sentiment perspective, its hard to say that the we've seen the sort of fear that typically accompanies a lasting market bottom. There's still plenty of speculative juice around. Consider these headlines from over weekend:

• Barron's: Are You Ready for Dow 20,000 (this year!)
• Vince Farrell on We've Seen Our Bottom
• Barron's cover story: Hitting Bottom? Several Banks and Brokerages Are Ready to Pop Up for Air
• Jim Cramer on An End to the Bear Market? and why this is A Turning Point
• Insiders, at Least, See Reason to Smile
• Just about anything at Forbes.

The closest thing to an admonition of caution was Barron's Technical columnist, Michael Kahn, who called this The Market Bottom That Wasn't.

That doesn't mean we can't see a decent bounce here -- there's lots of liquidity, and as we saw last week, the market stopped going down on bad news. That's usually good for a 5-10-15% counter trend rally. We saw that begin last week.

But Dow 20,000 this year? I highly doubt it . .

HenryTo · Posted: Tue Mar 25, 2008 11:21 am Post subject:

Hi Joe,

Sentiment is also very bearish on the USD - not to mention its oversold condition relative to its 200-day moving average.

From a fundamental standpoint, I expect the Euro Zone and the UK to start cutting earnestly later this year. The leading indicators in these two regions have been "performing" worse than the US leading indicators. I also expect the Euro Zone's trade balance to deteriorate as capital spending in China grows slowly this year. The Euro Zone has been benefiting hugely from heavy machinery buying from China - but going forward, the Chinese - at some point - will start competing with the Euro Zone in this area as well. U.S. exports in high technology, meanwhile, would still be untouchable at least for the next decade.

Best regards,

Henry

joe0528 · Junior Poster Joined: 22 May 2007 Posts: 24

Hi Henry,

What are the reasons you are bullish on USD now except you talked about the less dovish statement from Fed in their last meeting?

Bests,
Joe

HenryTo · Posted: Tue Mar 25, 2008 9:01 am Post subject:

I am still not seeing any dollar bulls here - especially after this morning's move:

http://www.bloomberg.com/apps/news?pid=20601101&sid=a73blAJuPsp4&refer=japan

diesel · Posted: Tue Mar 25, 2008 1:00 am Post subject:

rffrydr · Posted: Mon Mar 24, 2008 10:08 pm Post subject:

Yes...a deeply repressed secret if anything like me. I got burned then; but options have allowed me the space to get that back on the last 3+ deviation move. But Madman Cramer is talking about equities--with the dollar, oil, financials as a backstory. And I can't remember seeing any of this last week--it was head for the hills with BSC and LEH burning in background, and even Goldman set to fall. It was all Fed trashing the dollar and hard assets uber alles.

Anybody have a sense of this, "Cramer Consensus"? One thing I think we can safely say that with 500up; 300down; 200up...there is no "trading consensus."
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HenryTo · Posted: Mon Mar 24, 2008 8:40 pm Post subject:

With regards to the USD, many analysts (you could've watched them on Bloomberg Video) were opening a rebound of the Dollar Index in the beginning of the year, right before the latest plunge ending March 18th. You don't see many of them now. They may be wishing for the USD to rise back up but I doubt many of them are taking a long position on the USD.