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 [ISA] 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 ISA 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 ISA 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 ISA [Trade Navigator]. I like it. I feel that it 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 work!"
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 was.
||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 only one.
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.