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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

  • Short term sentiment jumps Monday then declines through rest of the week and ends slightly more bearish than the previous Friday.
  • Financials & Utilities, although still bearish, see improvements in sentiment.
  • Industrials & Telecommunications fall in sentiment.
  • Most active sector for ideas is Oil & Gas.

LOOKING AHEAD… 

There are only two types of investors currently in this market…the quick and the dead. Fundamentals have become a thing of the past, sentiment is driving the present and nobody really knows what the future holds. 

This is not your father’s 'Buy and Hold’ market…it’s not even a ‘Buy and take a lunch’ type of market. Never before seen volatility and uncertainty continues to cause the sell-side to suggest that their buy-side clients close more positions on either side of the market, than they open. 

Once, burned, twice shy…but is there even a saying for the fifth or sixth time? While some investors had a good weekend, re-assured by the activity towards the end of last week, others remain well aware that during October there were only 3 days in which the Dow Jones did not rise or fall triple digits. Volatility is still the king and while an 11% gain in a week is a money-making opportunity, overall sentiment by the sell-side remains unchanged and bearish. Perhaps it’s the fact that the Nasdaq’s last five weekly returns are -10.8, -15.3, +3.8, -9.3, +10.9. Not exactly the type of numbers that give one comfort regardless of which direction you feel we’re heading over the longer term. 

However, as mentioned, this type of volatility creates fantastic trading opportunities and for those with a higher risk threshold, money was there to be made last week and the sell-side knew it. Although the sell-side started the week bearish, by 11:30 a.m. Monday morning they were already strongly suggesting that their client base get back into the market. By week-end the market rallied to its best results since 1974. 

This is not a market for the weak of heart or short of cash. This is certainly not a market for those that fall in love with their positions. Things are moving too quickly these days and love, in this market at least, is destined to end in heartbreak. 

Short-term shifts in sentiment are resulting in money being made. Knowing that, for the first time we have broken out sell-side sentiment on industries into the grid you see below encompassing both longer term and shorter-term sentiment indicators. The further to the right, the more bullish the longer term sentiment, the further above the midpoint axis, the more positive the shorter term sentiment over the last week. The size of the circle represents the amount of ideas that were sent through First Coverage about that specific industry during the past week.

While nothing is sitting in ‘Bullish’ territory, Oil & Gas remains the industry with the most positive long-term sentiment. Financials and Utilities, while still long term bearish, showed the greatest bullish sentiment changes over the last week, perhaps as a result of a growing belief amongst the sell-side in a low interest rate environment being around for a longer time. Most of the other industries have not moved much from last week’s sentiment but Industrials & Telecommunications saw the largest week over week decline.  

Stocks that have received a lift in sentiment during the month of October and particularly over the last week include BAC, POT, MFC, CSCO and RIMM. Stocks that have gone the other way include TIF, UA and SAP.

Source: Weekly Street Sentiment: Only Two Types of Investors, the Quick & the Dead