The Investor's Intelligence sentiment survey administered by a private company called Chartcraft and is edited by Michael Burke. This newsletter survey has been conducted weekly since 1963. The survey is constructed by polling 140 investment newsletters and determining whether the publisher is bullish, bearish or neutral. Neutral means generally bullish overall, but expecting a short-term downside correction.
Investors tend to purchase a newsletter service when it is bullish as opposed to when it is bearish.
Like other contrarian indicators, when the survey shows too many newsletter writers as being bullish 55% or higher), there is a good chance that the markets are near their highs. On the other hand, if there are too many bears (40% or higher), it suggests that the market may soon find a low because there is to much pessimism.
During the last ten years there have been several instances when low bullish sentiment and higher bearish sentiment has coincided with market bottoms; (September 1998, September 2001, July and October 2002, Feb/March 2003, March/April 2006. This survey seems to take longer to reflect bearishness than other types of sentiment surveys.
The survey results are released every Wednesday and reflects the opinion of newsletters from the previous Friday.
http://www.investorsintelligence.com/x/default.html
The Consensus survey monitors the attitudes and positions of both brokerage house analysts and independent advisory services which has hundreds of contributors. The data covers fundamental, technical analysis as well as cyclical data. What is different about this survey is that it is published only after an adviser or analyst publishes their opinion and it has had a chance to influence the investing public. The editors determine the percentage of their contacts who are bullish on the market. Like most contrary indicators, when the survey shows too many advisor's as being bullish, it very often corresponds to market highs. Conversely, too many bears suggest that the market may soon find a low.
When bullish sentiment rises into the 70's, it usually indicates to much bullishness and the markets may have a harder time going forward. When bullishness falls into the 30's, the market has a better chance of bottoming.
The weekly Consensus number of bullish advisories is available each week in Barron's. http://www.barrons.com
The Consensus website is http://www.consensus-inc.com/
Corporate Insiders may sell their companies stock for any number of reasons including estate planning purposes or diversification. They may buy their shares because their companies stock price has fallen to a level where they believe it is a real bargain or value.
When insiders are selling much more stock than they're buying, then we can assume that corporate insiders are not feeling optimistic about their companies prospects or current industry conditions and more often than not it precedes weakness in equities.
This type of information can be extremely helpful because if insiders are stepping up and buying when the overall market, specific industry groups declining or out of favor, it can be a good indicator because insiders typically tend to understand their business and their markets better than most people.
InsiderScore is one of the best services for tracking insider buying and selling. For more information, please visit www.insiderscore.com.
The AAII (American Association of Individual Investors) is a non-profit organization headquartered in Chicago, and was founded in 1978. Their stated mission is: "assisting individuals in becoming effective managers of their own assets through programs of education, information, and research." It is affiliated with NAIC, the organization that helped so many investment clubs get started in the late 1990's.
The AAII is geared towards individual investors, and not institutions, pension funds, or professional traders. AAII members are long term investors that primarily use fundamental analysis and invest in sound companies. They do not use technical analysis for the most part.
The AAII sentiment survey is a weekly poll conducted by that organization which intends to record the overall sentiment of their membership. They ask their members where they think the market will be in six months, and group the responses into three categories: bullish, bearish or neutral.
Like most contrarian indicators, when the survey shows too many investors as being bullish (70% or higher), it very often corresponds to market highs or points where the market struggles for awhile. When only a few members are bullish (20% or lower) it suggest that the market may soon find a low.
This survey tends to be more volatile than the Investors Intelligence Survey.
This information is available in Barrons magazine http://www.barrons.com
The AAII's website is http://www.aaii.com
The Rydex family of mutual funds http://www.rydexfunds.com has a selection of funds that cover broad indices as well as narrower subgroups. These funds are very popular with market timers, as some of them are highly leveraged (as much as two-to-one, so for example a 1% move in the S&P would correspond to a 2% move in the fund), and the Dynamic funds can be entered or exited intraday.
The most popular funds are based on the S&P 500 and the Nasdaq 100. Rydex makes the asset levels of these funds available to the public each evening, and by observing where these active traders are placing their money, we can get a handle on their sentiment.
Like all contrary indicators, when these traders become so optimistic that the asset flows into the bullish funds soar higher, it is usually a good sign that any up move is likely to be short-lived, and most likely we will see declining prices. By the time these traders recognize a trend and shift their assets to benefit from it, it is usually too late.
Newspapers, magazines, financial radio shows are just a few of the sources that can be good contrarian indicators. When stocks or houses for instance are soaring or falling, more attention will be given to them. Magazine covers in particular are notorious for putting companies on the cover when they are close to their peak share price. The same is true when it comes to other types of investments to such as international investing, buying gold or realestate. It isn't unusual either for a bull to appear on a magazine cover near a market top or a bear near a market bottom.
The point is people are fed what they crave. When bad news is out there, the media is more than willing to supply people with a good dose of it which in-turn inflames peoples emotions.