Wall Street Sentiment
"The most profitable and useful sentiment on Wall
Street for more than a decade. Period."
"Some of the most valuable information I get is from Mark Young's
weekly sentiment polls. He not only provides the raw sentiment
numbers, but he also performs a remarkably insightful and accurate
analysis of the poll results. I would hate to be without it."
"The service is a very handy tool to have in one's
trader's toolbox. [Mark Young's]special take on sentiment can help keep
you on the right side of the indexes, even with the seemingly
irrational moves we've had since 2000."
New York City, NY
"I have been trading the
markets since the early 1970's and have tried just about everthing out
there..with very very modest success...that said..i can tell you that I
find your "sentacator".. the most accurate..and simple to use technique
for predicting the near term direction of the S & P index.....this
is stated with a deep sense of thanks to you for presenting this
product... you have my heartiest congratulations."
"Mark Young's service is an invaluable sentiment service. Using it with
other indicators can give the fine edge to making a successful trade,
and passing on a bad one."
New York City, NY
"Mark, just wanted to
send you a quick complimentary note on the ISA. Most of my market
analysis prior to Aug. 2003 has dealt with classic TA and price action.
I've thought about investor sentiment and crowd psychology over the
years, but never followed a quantifiable, "for pay" service until
subscribing to your service [Trade Navigator]. I like it. I feel that
helps give me a more complete "feel" for the equity market. Please make
sure that I'm rolled into the new premium ISA and keep up the great
Our Unique Approach
While the use of investor sentiment is fairly widespread and manifestly
beneficial, it is often misused and misunderstood.
In order to
maximize the benefits provided by the use of sentiment data, one must
grasp the nuances of sentiment and properly contextualize it.
How do we do this? Firstly, it is important to know that sentiment data
tells us different things at different times. For example, when the
market is in a strong up trend, an "excessive" number of Bulls in one
poll or another means something quite different that even a smaller
number of Bulls in a bear market. It is imperative to have solid
technical tools to help determine the context of the market--Bull or
Bear, up trend or correction.
Additionally, we look at differing sentiment sectors. Different groups
of investors can have dramatically different takes on the market.
knowing this and examining each sector separately is something that
we've found most helpful.
We believe that "Sentiment" can be
divided into 3 distinct sectors that are worth exploiting:
||The first is Individual Investor sentiment. This is one of
the more widely followed areas of investor sentiment. While this
sentiment sector is still valid, it is not the monolith that it once
||The second sentiment sector that we study is Individual/Small
Speculators. This sector is peopled with the most aggressive and often
less sophisticated speculators. Because they are aggressive and
typically over commit and use leverage, this crew can be a good fade
when they are heavily committed to one side of the market. This sector
is more short-term.
|The third sentiment sector that we study is Small Hedge
Funds. By "hedge funds" we mean long/short directional equity funds,
and exclude commodity, debt, or arbitrage funds. In recent years there
has been a huge increase in the number of small hedge funds. In the
past, their numbers have been relatively insignificant, but now their
numbers are large enough and they control enough in the way of assets
by employing ample leverage that they rival medium sized mutual funds
in their importance. More, relevantly, their are prone to be over
exposed and thus more subject to emotional (uneconomic) decisions.
It is imperative to keep one eye on all three sentiment sectors. We
have seen many speculators lose substantial sums because they look at
We view excessive sentiment in even just one of our sentiment sectors
as a reliable precursor to a reversal and tradable move, provided there
is trend and breadth support. Excessive sentiment in all three or an
excessive sentiment signature over several weeks are a marker for a
future top of larger proportion.
Additionally, we also use sentiment to provide confidence in a move and
to avoid whipsaws.