CHART OF THE DAY: CAN BLOGS HELP YOU INVEST?
I’ve noticed a remarkable trend over the course of the last few years – the financial blogosphere has been consistently bearish and the comments within many of these blogs is even more bearish than its author(s). Wondering if this could be turned into an economic indicator, I collected some data from sites that I judge to be fairly even keel in terms of their market outlook (no fear mongering blogs and no Abbey Joseph Cohen blogs need apply). The process was very straight forward: bullish stories divided by bearish stories on a weekly basis.
I ran the data over the course of the incredible March 2009 rally. Not surprisingly, the results speak for themselves. The sites I sampled (which will remain anonymous for obvious reasons) have been overwhelmingly bearish throughout the entirety of the rally with the exception of one period – January 2010 – just before the market experienced its largest downturn of the rally.
Not exactly the most scientific of indicators, but I’ll update it from time to time just to see if the inverse correlation to the market is maintained. Who knows? This might actually be a viable long-term sentiment indicator….
good work. please keep us updated with this indicator.
when it comes to the headline question “CAN BLOGS HELP YOU INVEST?”, they definately
helped me to made a lot of money during whole downturn 08-09, then i reinvested all my profits from shorts and put options into the smallcaps(oil and gold juniors mainly) during oct-march 09 only to take profits too soon and loose big time in summer and autumm of 09 while i was shorting the market.
if i only still had everything i bought in feb/march 09 and sold it yesterday, i would be retired…
shoulda, woulda, coulda at least the life is good.
Don’t feel bad. I did the EXACT same thing.
would love to see way more bloggers (including technically devoted) included here:
http://tickersense.typepad.com/ticker_sense/2010/03/march-8th-blogger-sentiment-poll.html
many bloggers are very smart. too smart i would say, since their deep knowledge of our underlying problems prevents them from an unbiased view of the market itself.
TPC: What is your TUI saying right now?
That retail sales report had to be the most telegraphed numer on earth. What I want to know is this: who is stupid enough to buy stocks when they’ve risen 90% of the days in the last 5 weeks?
May be the last bulls…
Breadth and size of the move is weakening. It’s just poor judgement to get greedy over a 4% move higher when we are this overbought.
I share the same view, I expect a correction near term. I should have added to last post: …and the last shorts covering…
I like. Screw polls. This is what people do & not what they say. I’ve noticed this trend also. You’re the only site I can think of that consistently posts both sides of the market.
The banks own this market. We all know and we are just puppets in their game.
Remember guys – rallies always start on bad news and end on good news.
Nice bit of research!
Working from memory, it looks like even the interim “peaks” ~7/09 & ~9/09 correlate to mini-corrections. I see why you wouldn’t publish which blogs but how about the total number?
Pragcap,
Interesting data, though it seems that given your methods, the minor ups and downs might have consider room for errors (selection bias, subjectivity etc.) and it would be easier to read if you presented the S&P chart lined up on the same chart. Also it would really be good to show the data from 2008 too, or even longer into the past. I’m thinking this year has been unusual and further back data might help see whether this indicator reflects that.
I’m tempted to ask whether you included http://www.philstockworld.com in your data collection, but won’t. However, I’ll note (in support of a certain subjectivity) Phil’s articles are often a mix of bearish and bullish – as in, “the fundamentals are terrible but the market’s going up and hitting our levels, which means buy, but it’s hard to.”
Ilene
thanks for P S W, ilene……in the bookmark it is.
Hi Boatman, thanks – I select articles for the Favorites section (and charts, insider) and really enjoy Pragcap’s work. I’d say he’s one of the most clear and balanced of any blog person out there. Not to mention, TPC’s been usually right on the market since I’ve been paying attention.
“always start on bad news and end on good news”
Actually, markets these days always start to discount the news before the news is publicly known. Case in point is the Bernanke confirmation and the Greece debacle. The Jan sell off was a convenient little reminder to Congress not to muck with things and confirm Bernanke. Also, I’m sure the Greece situation was known by large players long before it was publicly revealed. That’s why that announcement pretty much marked the bottom of this move.
great work. I have been thinking of developing this type of indicator for some time but could never find enough even keel bloggers
really nice work