Derived from the aggregated analysis of thousands of actual trade ideas and data being sent in real-time from the sell-side to the buy-side, the First Coverage Weekly Street Sentiment provides a snapshot of market trends and a unique perspective of the mindset of the Street for the week ahead. The following data has been extracted directly from all information transmitted in the past week by sell-side representatives from more than 250 firms submitting information to portfolio and asset managers across North America via the First Coverage platform.
WEEKLY STREET SENTIMENT
- Overall tone of the sell-side remains neutral and unchanged from last week.
- Most Bullish industry by sentiment is Utilities.
- Most Bearish industry by sentiment is Basic Materials.
- Most active sector for sell-side ideas is Technology.
- Sell-Side Certainty Index rises above 100 although volume of ideas being submitted falls from last week’s record levels.
PREVIOUS SENTIMENT INDICATED…
On October 13th: "The sell-side is suggesting that their clients position themselves for a turn in the market."
What’s happened since: The market rallies on Monday for its biggest one-day gain ever and finishes the week up 4.5%.
The most consistent aspect of the data sent from the sell-side to the buy-side through First Coverage last week was its inconsistency. Sentiment shifts are happening much more rapidly (over the course of a couple days in some cases) than at any other time we’ve tracked. Adding to the increased volatility is the fact that more players are moving to the sidelines until some degree of stability returns.
It’s clear that sentiment is driving this market. Last week, after setting their buy-side clients up for the massive dead cat bounce on Monday, the sell-side turned bearish pre-open Tuesday; a full 5 hours before the market cracked. The sell-side got increasingly bearish until Thursday mid-morning when they once again turned bullish prior to the start of the end-of-week rally.
After all the movement, however, at the end of the week overall market sentiment levels were unchanged from the prior week. What’s more, for the first time ever, not one single industry exhibited any sentiment level besides neutral. While industries like Technology and Basic Materials saw bearish sentiment changes and Consumer Services underwent a slight bullish shift, none of these changes were what one would call ‘conclusive’ or ‘dramatic’.
The most interesting data points for First Coverage users over the last week were probably the ones they didn’t see. A decline in ideas being submitted into the system from the prior week is a clear indication of hesitation by users to put their necks on the line. JP Morgan Chase CEO Jamie Dimon stated last week, “if you’re not fearful, you’re crazy” and the decline in data last week exhibits a continued and growing sense of fear amongst the sell-side.
France’s Prime Minister Sarkozy commented that, “the greatest risk is in inertia.” While he was talking about the global economy it’s easy to see that this also could also apply to the equity markets. Going forward, we’ll monitor the amount of data being presented by the sell-side to the buy-side and feel that until we see increased information flow and ideas we’ll continue to find ourselves in a market environment that reflects a lack of confidence.