Portable Alpha Daily

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Wednesday, September 27, 2006

Investor Sentiment

If the market’s were to react in-line with expectations from the media, the DJIA will likely vault past its all time-high today on it’s way to 12,000 sometime early next week. So maybe that’s a slight exaggeration, but you get the point. Someone should create a Squawk Box Sentiment Indicator, maybe based on how many times one of the anchors mentions “new highs” over say a five minute time-frame.

In reality, a lot of investors use sentiment indicators to gauge the market, ranging from the Investors Intelligence Advisor Sentiment Survey to the Ticker Sense Blogger Sentiment Poll with many in between. Here is the recent poll from Ticker Sense:

Personally, I’m a fan of the Investors Intelligence Survey and I’ve considered including their values in this blog, but I’m fairly certain that would constitute a copyright infringement. I tend to use these surveys as contrarian indicators; when the polls show too many bulls, I normally interpret that as a bearish indication. Looking at the above poll, I’m comfortable in the bullish camp for the time being.

Short-Term Technical Indicators – All eight short-term indicators strengthened overnight (not surprisingly) with seven higher than last week’s levels.

I noticed that when looking at my graphs and charts from certain browsers, the pictures are not very clear, even after they are clicked on. Since I use Firefox, I wasn’t aware of this until yesterday and I apologize. I’ll try to figure out a solution which might include another post later on today. Any suggestions are welcome.

Long-Term Market Model – Bullish since August 23rd.

Investor Sentiment – Yesterday’s activity saw an ease in both the VIX and VXN but modest gains in the Total, Index, and Equity Put / Call ratios.

Asset Allocation – 75% to 85% invested within the actively-managed portion of the overall investment portfolio. 15% to 25% in cash or bonds.

Beta Exposure and Portable Alpha Generation

Top Rated Major Market Derivative – NASDAQ 100 (QQQQ)

Top Rated Style-Box Derivative – Morningstar Large Cap Core (JKD)

Top Rated Sector Derivative – iShares Dow Jones Software (IGV)

Today’s Top “Buy” Recommended Stocks
  • NVR Inc. (NVR)
  • CPI Corp. (CPY)
  • American Eagle Outfitters Inc. (AEOS)
  • Veritas DGC Inc. (VTS)
  • OM Group Inc. (OMG)
Today’s Top “Buy” Recommended Exchange Traded Funds
  • Vanguard Telecom Services (VOX)
  • iShares MSCI Mexico Index (EWW)
  • iShares Goldman Sachs Software Index (IGV)
  • iShares MSCI Spain Index (EWP)
  • Telecom HOLDRs (TTH)


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