B.I.G. Tips – Running of the Bears

Jan 14, 2016

With the S&P 500 seeing its weakest eight-day start to a year in history, you would expect to see stock market sentiment become less optimistic.  What is really surprising, though, is just how weak sentiment has become.  According to the weekly sentiment survey from AAII, bullish sentiment dropped from 22.2% down to 17.9%.  Not only is that the 45th week in the last 46 weeks where sentiment has been below 40%, but this week’s level of bullish sentiment is the lowest weekly reading in more than ten years (April 2005).  As bullish sentiment declined to the lowest levels in a decade, bearish sentiment has also been on the increase, although not to quite the same degree.  In this week’s survey from AAII, bearish sentiment increased from 38.3% up to 45.5%.  That’s a high reading, but you only have to go as far back as 2013 to find the last time bearish sentiment was higher than the current level.

So what does this all mean? We just published a complete analysis of the S&P 500’s performance following prior periods of extreme low readings in bullish sentiment.  While sentiment is typically considered to be contrarian in nature, just how consistent has it been.  The results may surprise you.

See our B.I.G. Tips report by signing up for a monthly Bespoke Premium membership now.  Click this link for a 10% discount ($89/month).

B.I.G. Tips – Extreme Readings in 10-Day A/D Line

Jan 14, 2016

With seven days in the last ten where the S&P 500’s daily A/D (number of advancing stocks minus the number of declining stocks) line has been -300 or more, the 10-Day A/D line has plummeted to the lowest levels in at least a year.  In a B.I.G. Tips report sent out to Premium and Institutional members, we looked at similar historical readings in the S&P 500 10-Day A/D line to see how stocks performed going forward.  If you are for an idea of how stocks have historically performed in the short and medium term following similar instances, this report is a must read.

See our B.I.G. Tips report by signing up for a monthly Bespoke Premium membership now.  Click this link for a 10% discount ($89/month).