I thought I might try something different here, and see how it goes. It's quite difficult for me to post a lot to the various topics, especially with charts, since the method I use for posting charts is very cumbersome. Some charts can take me a half hour or more to put together. Since the charts I use for posting are not my 'working' charts, this work is duplicative.

I have various ideas and thoughts here and there about different things, and if I have a 'central clearing area' where I can just put out a sentence or two, pointing to something without doing the work, the members can do what assessment and analysis they want with the ideas, and post charts if they want, preferably to the respective areas they have for that topic. This way it would leave this topic more 'clean'. If you have a question or comment on what I was pointing out you could post that in here.

Let me know if you have any thoughts on this, or anything you think would be helpful/useful. Keep in mind I am not going to just tell you all my best setups in advance, especially if I plan to trade them, as that is not 'what I do' in here, or anywhere. I want to point out things that may need some work, and might go unnoticed otherwise, or are just of interest.

Thanks for the warning, I won't watch it then...

:-)

If you want to have some fun with a sentiment indicator, take a look at the ISEE Index. Here's a place for a chart:

http://www.ise.com/WebForm/viewPage.aspx?categoryId=126&header2=true&menu0=true

Basically, this is a variation of a put/call ratio that takes out market makers and firm trades, and does some other things to get what they feel is a much better representation of the retail customer. Now, what does it tell us? Keeping in mind, like any sentiment indicator, it can, at best, give you a gauge on one aspect of sentiment that might be useful to confirm extreme areas one might already be watching.

The spike to 220 on Monday the 9th was the highest on record, going back to 2006 (if they have further-back records I couldn't find them). Notice the correlation in this bear with low numbers (lots of puts) and shorter-term bottoms, and high numbers and shorter-term tops, same as the put call ratio (except reversed, since with this index a high number (notice too it doesn't use a fractional methodology), means lots of calls). So, the recent bottom not only didn't have a low spike, meaning lots of put buying, it went into the low staying slightly above 100, and then spiked to an all-time high of 220. That is the opposite of what one would expect at a bottom. Go back and look at the November low area (the chart is interactive, and pretty easy to look at date ranges).

The other thing I noticed looking back at spike extremes and dates is that this thing is usually 1-3 days before the actual price extreme in most cases, it seems. The Jan '09 top was the last big high extreme, it actually came in 5 days before the price extreme finally printed. Most that I looked at were a day or two ahead. It seems this is a leading indicator? Anyway, we are now at 5 days after the highest extreme on record.

There were two other big extreme areas. One was in May '06. Go back to your charts and look at this. The index here printed two spike highs at 209 and 211, on 5/3 and 5/9. The market topped on 5/8, but hit a high only 0.17 points higher by my data than on 5/5, two days after the first spike. On 5/9, the day of the second spike, the high was 0.10 points below the high on the previous day, 5/8. Point is, we had three days of nearly equal highs, the the first spike led the top by two days, and the second spike was right there. The S&P then dumped big, given it was still a bull market.

Now look at the 12/29/08 extreme. The market topped for this monster leg down five trading days later, but also notice a few things. Most of the move was done in the first three days, and nominal new highs with narrow ranges were put in on the last two days. Also, the calls were being bought as this started to roll over (buying the dip), then they gave it that year end and first few days of the new year run, then it was crushed. The really curious/odd thing about this indicator is that by the time the actual top or bottom is hit in price the indicator has usually already went back to a more 'stable' position. Is this because the retail crowd has already done all the damage to themselves that they can do, in anticipation of what they think is going to happen?

So, here we sit now, five trading days after the biggest spike high on record. 'Retail' bought the reversal more than they have bought anything since March 2006, according to this index. And when did they buy like crazy? Right off the low, not after it started up. They bought the 666 hype, the talking heads, the bottom callers, the astro-bottom callers, the whole hook, line, and sinker. They bought like madmen before they even saw it going up. Now, imagine that's the bottom of the entire bear market and these geniuses are going to make a ton of money. It could happen, but I think it would be the first time in history. Just something to think about. This indicator is worth playing around with, since we rarely ever see anything that appears to lead the market, and this looks like it might. In combination with my own work, like POC, pivots, GLOBEX points, and so on, it is one more thing I can use to support my areas.

interesting, interesting..

USD in virtual freefall. Let's see if it stops, or if this creates a panic. I think they are playing a risky, risky, risky game with all our lives, and life savings. But what do I know...

This is a virtual collapse in the USD in the making. Probably it will slow in here, but it is scary to see it, and have all one's assets in the USD...

it did the same thing a couple of months ago..

Yep. One of my worries, though, is that at some point a true liquidation starts to occur, and panic ensues, and it's all over.

One thing for sure, the bullish sentiment is by far the highest I have ever seen. They are even saying that it's now an 'official' bull market, since we are up 20% off the low in the S&P now. Of course they don't bother to think whether there is really any sense to that statement. For example, let's say a stock hits $800 per share. Then it falls to 10 cents a share. If it pops up 20% to 12 cents a share it's now in an 'official' bull market? Where do these people come from? I will stick with keeping an eye out for this being the sell the news final climax to the uptrend. I'll need further confirmation than this nice little drop we just got here, and I'll stay extremely respectful of these deluded bulls (and long side if it keeps going up), but I am very watchful for this.

So now they are spending another trillion on treasuries and other securities. With what money if I may ask? Looks to me like the government is doing it's own Ponzi scheme at this point. Look how 10-year rates plummeted today.Biggest decline since 1962 according to Bloomberg and of course the dollar got whacked and gold futures gained $70 in an hour. Swell.

I think the second chart is particularly telling. I agree with the conclusion, this market is nothing more than Euro-yen carry trade on, Euro-yen carry trade off. No balance, no participation, no depth, as I discussed in my last monthly commentary, just leverage/deleverage, risk on/risk off, and that's it. Skynet is totally sentient. How long, like in the movie, until the machines decide to vaporize the useless humans?

http://www.zerohedge.com/article/tale-two-decouplings