Weekly Street Sentiment: Sell Side Is Passive Aggressive

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 |  Includes: AXP, BAC, BIDU, CBS, DLTR, FRO, GM, SNDA, SQM, WMT
by: First Coverage

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Be bullish! Be long! And (in the immortal words of Jeff Goldblum from the 1986 movie The Fly), be afraid…be very afraid!

The sell-side is bullish when they tell the buy-side to get long more than they did in previous weeks. The sell-side is bearish when they are suggesting the buy-side get short more than they did in previous weeks. However, that being said, what’s happening now could best be described as the sell-side being passive-aggressive.

Those that remain are suggesting their buy-side clients stay long, but on the flip side, they are finding themselves lonelier by the day as many of their peers are just closing out long positions and moving to the side lines.

To put it into numbers, over the last three weeks, the sell-side has closed out 40% more suggestions than they have initiated to their buy-side clients. This activity is a clear reflection of uncertainty in this market.

Between the decline in the ratio of new ideas vs. closed ideas, the “sell in May” tradition and the “too far, too fast, too soon” camp, there seems to be a general consensus amongst experts that this is all going to end badly, and yet at the same time, there is a clear hesitation amongst the sell-side to suggest that their buy-side client base get off this runaway bull. (Can you really have a “runaway bull” outside of Spain?)

Hard to say if this uncertainty combined with immobility represents the sell-side “draining the last drops” from the rally for their client base or if the inactivity is more reflective of them being stuck like a “deer in headlights” of this rally. Either way, like the numbers say…stay long but be nimble.

Now, as to where one should be long…well, that’s an entirely different question. Even though the number of ideas being entered is less than those being closed, the sell-side is still strongly advocating certain positions at the expense of others.

Consumer Goods and Technology saw the two largest bearish sentiment swings this week, which generally means you have a few days left to get out of the sector but not to dawdle in your capital re-allocation. Technology and the Financials led us out of the abyss with their recent two-month rally, and it would be a fair assumption that if the market were to turn, they would lead the pack down again.

Healthcare and Energy led the bullish sentiment charge last week, which shows that our love affair with Energy might be in the process of being rekindled with Oil hovering around $60/barrel again.

As far as specific stocks, stay away from the following five, which definitely reflect a notion that low isn’t low enough for some names in particular. (GM, are you listening?):

Symbol

Company

AXP

AMER EXPRESS INC

GM

GEN MOTORS

FRO

FRONTLINE LTD

CBS

CBS CORP CL B

BAC

BK OF AMERICA CP

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The five that the sell-side continues to like are the following:

Symbol

Company

SNDA

SHANDA INTERACTIVE

WMT

WAL MART STORES

SQM

SOCIEDAD DE CHILE SC

BIDU

BAIDU.COM, INC.

DLTR

DOLLAR TREE STORE

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Finally, the biggest movers over the last week do share one common trait…the letter C. The sell-side got dramatically more bullish on Cisco (NASDAQ:CSCO) and dramatically more bearish on Citigroup (NYSE:C).