Testing the Bull's Resolve

In spite of our sentiment survey remaining on a buy signal for the past six weeks, losses continue to mount for the bulls. In that time, the S fund has dropped -8.47%, including -3.96% just last week.

Fund Allocation ~ Top 50 Chart 3.jpg
2012 Top 50 Trend.jpg

You might remember that going into the previous week, the Top 50 had increased their collective stock exposure by 20%, although total stock allocations remained conservative at just 29%. And on Tuesday (post holiday), those dip buyers were seeing some great upside action as the S fund tacked on 1.34%. Unfortunately, the rest of the week saw some serious selling pressure, which led to the major averages hitting multi-month lows.

Going into into the new week, the Top 50 dropped their collective stock exposure from 29% to just 16%.

Total Tracker Fund Allocation.jpg
2012 Total Tracker Trend.jpg

On the other hand, stock allocation across the Total Tracker remained relatively unchanged with a total allocation of 47.46%; down just 0.53% from the previous week.

So our sentiment survey has given back much of its gains from the previous months as has the Seven Sentinels, which still remain in a buy condition, although it did flash an unconfirmed sell signal after Friday's action. But this market continues to be prone to whipsaw action, which makes cash or bonds (G or F fund) look very attractive. At some point, we're going to want to be a buyer in this market, but picking a bottom can be quite tricky. We're due for a bounce, but I'm not so sure it would be anything more than a selling opportunity. Sentiment is not overly bearish across the various surveys, so caution is still warranted.
 
Coolhand,

Excellent observation. The sentiment survey remaining on a buy signal for the past six weeks, with significant losses continuing to mount for the bulls is an eye-opener for anyone who blindly trades only one of many indicators that must be considered when investing or trading ....
 
airlift;bt5452 said:
Coolhand,

Excellent observation. The sentiment survey remaining on a buy signal for the past six weeks, with significant losses continuing to mount for the bulls is an eye-opener for anyone who blindly trades only one of many indicators that must be considered when investing or trading ....

From a relatively short term perspective, you are correct. But longer term (years), the sentiment survey's results have been impressive.
 
I'm paying up my margin call and as long as I have cash this bull has resolve - I'm sticking to the I fund - being lonesome doesn't bother me.
 
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