Data Source:
My seven STOCK MARKET TIMING INDICATORS were:
BEARISH on June 12, 2022
BEARISH on May 1, 2022
https://el2017.blogspot.com/2022/05/as-i-warned-on-april-17-economic-logic.htmlMODERATELY BEARISH on April 17, 2022:
NEUTRAL on March 11, 2022:
https://el2017.blogspot.com/2022/03/economic-logic-stock-market-timing.html MODERATELY BEARISH on February 8, 2022:
My average of seven useful indicators works better than any one market timing indicator, especially this one in 2022 !
Indicator Analysis:
This is an indicator of small investor market sentiment. When these less sophisticated investors get unusually bullish, it's time for traders to sell. When very few are bullish, it's time for traders to buy. It is a contrary opinion indicator. I interpret the percentage bullish based on observations from 2005 through 2021. That methodology does not seem to be working this year.
This is the only short term market timing indicator I track, of the seven market timing indicators I follow.
This short term AAII Sentiment indicator has been bullish for 21 weeks in a row, as interpreted based on past experience, indicating that the stock market is oversold. But unlike in past years, so far there was no imarket rebound. The last time this indicator was so bullish was from May through August 2020.
With this indicator, you can look back after a year is over, and see that the lowest AAII bullish levels were good buying points for trader,, and the highest AAII bullish levels were good selling points for traders. I have determined high and low percentages of bullish small AAII investors real time by historical precedent -- I've been tracking these data weekly since 2005.
The bullish percentage of investors in 2022 has reached LOWER troughs than in past years. With the high inflation, high energy prices, low consumer comfidence and low confidence in the President's party, the troughs of bullish AAII investors seem to be lower in 2022 than in the past 16 years.
Looking back after 2022 is over, it's possible the AAII indicator worked for short term traders. It just didn't work based on the old standards -- observations from 2005 through 2021. But ... I'm still looking for a replacement stock market sentiment short term indicator anyway. Fortunately, I use seven market timing indicators because I expect at least one to stop working in a given year.
AAII Sentiment does NOT tell us if we are in a bull market or a bear market. It tells us if stocks are "overbought" or "oversold". It only tells us if buying stocks today is a good idea for the next few weeks. This weekly indicator can change a lot in a few weeks. AAII Sentiment is a contrary opinion sentiment indicator, so it is bullish when AAII individual investors are bearish, and vice versa, recommending from 0% to 100% cash in a common stock portfolio. Based on market sentiment from an anonymous online poll of members of the American Association of Individual Investors (AAII). The four-week moving average has much less volatility than weekly data, but active stock traders should prefer the weekly data.
Week Ending on June 29, 2022:
= BULLISH
32.8.% of AAII Investors were bullish (unusually low)
(was 23.5% bullish = BULLISH last week) (unusually low)
Four Week Moving Average:
= BULLISH
28.1% of AAII Investors were bullish
(was 31.4% bullish = BULLISH last week)
Recommended Portfolio Cash
percentage for short term traders:
= 0%
(was 0% cash last week)
Data for the week ending 6/29/22:
22.8% were Bullish (under 20% is unusually low)
(was 18.2% last week)
(was 18.2% last week)
30.5% were Neutral (under 25% is unusually low)
(was 22.5%)
(was 22.5%)
46.7% were Bearish (over 50% is unusually high)
(was 59.3%)
AAII Indicator Analysis:
( over 80% is Bearish )
( 71% to 80% is Moderately Bearish )
( 50% to 70% is Neutral )
( 40% to 49% is Moderately Bullish )
( under 40% is Bullish
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