Sentiment Overview: Moving Toward Real Pessimism

It is Friday, time for this week’s sentiment summary:

Sentiment Surveys
The Association of American Individual Investors’ weekly sentiment survey had the bulls at 28% again (a decline of 10% points) and the bears increased by the same amount to 55%. This definitely moves sentiment towards real pessimism. The bull/bear ratio is almost equal to late February. But we aren’t quite at an extreme point - yet.

In contrast, there is not much excitement in the weekly Investors Intelligence survey as it is almost unchanged from last week. The optimists number 42.7% and the pessimists 30%.

ABC News/Washington Post Consumer Comfort Poll
Although the Reuters/University of Michigan Consumer Sentiment survey is the most popular measure of the economic mood of the average American, there are a few others. One of these is the ABC Newss/Washington Post Consumer Comfort Poll which has been conducted for almost 24 years, every week.

In contrast to the recent Reuters/Michigan Consumer data, this poll shows that US consumers are losing confidence. The past 3 weeks have it hovering at -50. In its entire history, it has only spent 14 weeks below -50 (with 8 out of those 14 occurring this year!). If this pace continues, it will be the worst year for this indicator yet.

Source: ABC News

Here is the chart for the Personal Finances sub-index which fell to a record low of -22 (percentage scale, not points scale). That’s even lower than in March 2009 when it was only at -4:

Rasmussen Index
Another measure of consumer economic sentiment is the Rasmussen Index. This survey is conducted every day so it is even more granular. After hitting a low in March 2009 that corresponded to the start of the spring rally, both the Rasmussen Consumer Index and Investor Index recovered along with the stock market. But now, they are once again falling.

As of Friday, the Rasmussen Consumer Index has fallen to 63.3 the lowest level since March 10th, 2009. The Rasmussen Investor Index is slightly more robust, having hit a four month low at 69.5 yesterday. To provide some perspective, the Consumer Index’s maximum was 127 reached in early January 2004 and its minimum, March 2009, at 54.7. The Investor’s Index’s maximum was 150.9 reached on early January 2004 and its minimum, March 2009, at 52.5.

Options Sentiment
The CBOE equity only put call ratio is showing movement from complacency towards apprehension:

The CBOE equity only options data suggests that we are rolling over, dovetailing with the breadth measures as well as the head and shoulder pattern in the major indexes.

Comments

[coldcall:]

Interesting finding about sentiment compared to the recently published article here:

seekingalpha.com/artic...

Yes i trust the opinion of private investors far more than the stated research of investment professionals cheerleading a market recovery.

Jul 12 09:59 AM

[I need more...:]

Change "pessimism" in the article title, to "Reality", and you'll have nailed it. Despite the attempt by CNBC, certain bloggers ( not many thankfully ), the MSM, and our wonderful "representatives" in DC, people in the aggregate are only ingnorant and apathetic for so long.
as unemployment rises, and the national pain threshold with it, folks are coming out from under their rocks and smelling the sulphur in the air.

Jul 12 10:47 AM

[dcb:]

Yesterday Mr. Obama asked for more time patience from the public from regarding the economy. Personally, I do not believe Mr. Obama's policies deserve more time, they are misguided, driven by special interests, not directed towards the root of the problem , will actually make the economy worse, and rip off taxpayers for wall streets benefit.

He has abandoned the policies he stated he stood for while running for election at every chance when faced with industry pressure. He has allowed wall street to manipulate the markets increasing borrowing costs, driving up the price of oil , delaying recovery.

He has knowingly talked about green shoots when there were none, creating false expectations. If we wanted a president we knew would lie to use we would have kept bush.

He has spent trillions bailing out wall street to keep credit flowing while American's need help to reduce debts.

He has staffed the White house with wall street insiders.

If you believe, like I do, that Mr. Obama needs to change course and has had enough time I urge you to write the white house explaining why he has had enough time, and why he doesn't deserve more. Below is the link:

whitehouse.gov/con.../

Jul 12 01:39 PM

[dcb:]

It would be nice to see the put to call ratio graph extended for date. clearly certain key points can be viewed as a key to go the other way. it loos like the march low was 0.8 and this would therefore be considered a entry long point.

I will say this, you can not know what is going on with the manipulation. according to this data we should be retesting the march lows, but clearly there were multiple instances where manipulation prevented the market from going lower. I do not know how this will effect the eventual outcome..

Last time the money flow index went down, the market went up (huh), now it is just turning under 50, which therefore if allowed could mean a good size drop.

Why don't we all admit. it depends on what goldman wants it to do. we had two months straight down they manipulated with their prop desk from jan to march. no reason for them not to do it again if they want.

Jul 12 02:47 PM

[User 357705:]

Hard to have positive sentiment when all the good jobs have been destroyed and shipped to other countries.

Jul 12 02:56 PM

[cross:]

Not enough time has passed to make a valid judgment re: how effective the stimulus package is. dcb, you are offering simple political commentary that is a regurgitation of talking points passed out by the rnc to fox news and on to you. You are also confusing the money appropriated by the previous administration to support banks (very successful, by the way) with the current stimulus package that has little to do with wall street.
(example: $700,000 to fisherman here in the Northwest to recover lost fishing gear. This program starts in September and will funnel much needed monies to a decimated industry. How is that "ripping off taxpayers for wall street"?

Something is missing from the U.S. economy: expanding consumer demand. The stimulus package is not nearly enough to replace the several trillion dollars in goods and services that will not be purchased over the duration of this recession, probably the worst contraction since the 30's
Did you really expect this recession to be over at this point? Declining unemployment? expanding GNP? full market recovery?
When does Obama correctly deserve credit or blame for his role in righting this mess? I would say in time for the mid-term election season; another year.
I recall much criticism of bush economic policies/proposals early on in his administration but I did not hear in the first year that those policies were a failure. They were, in fact, but no one could have known at that point.


On Jul 12 01:39 PM dcb wrote:

> Yesterday Mr. Obama asked for more time patience from the public
> from regarding the economy. Personally, I do not believe Mr. Obama's
> policies deserve more time, they are misguided, driven by special
> interests, not directed towards the root of the problem , will actually
> make the economy worse, and rip off taxpayers for wall streets benefit.
>
>
> He has abandoned the policies he stated he stood for while running
> for election at every chance when faced with industry pressure. He
> has allowed wall street to manipulate the markets increasing borrowing
> costs, driving up the price of oil , delaying recovery.
>
> He has knowingly talked about green shoots when there were none,
> creating false expectations. If we wanted a president we knew would
> lie to use we would have kept bush.
>
> He has spent trillions bailing out wall street to keep credit flowing
> while American's need help to reduce debts.
>
> He has staffed the White house with wall street insiders.
>
> If you believe, like I do, that Mr. Obama needs to change course
> and has had enough time I urge you to write the white house explaining
> why he has had enough time, and why he doesn't deserve more. Below
> is the link:
>
> whitehouse.gov/con.../

Jul 12 05:17 PM

[Thomas MacLeod:]

Seems like the crowd is increasingly becoming convinced that the Dow is off to retest the march lows again. A 5% fall in the Dow would certianly cement that thought. Remember when everyone thinks alike the opposite is most likely to happen.

Jul 12 06:14 PM

[Larry House:]

If we were dealing with a garden-variety recession, perhaps caused by one or two economic problems, massive stimulus might pull the economy out of the doldrums. This is not garden-variety. We barely avoided (or perhaps postponed) a banking collapse. Consumers are on their heels; the world economy is involved this time. We are not going to be stimulated out of this. It is going to take a generational adjustment to a new reality. Our economy is downsizing. And yes, people should speak of "reality" not "pessimism."

Jul 12 11:02 PM

[Matt Stone:]

We've dramatically reduced discretionary spending in our household. I suspect others already have, or will be doing the same.

Jul 13 12:44 AM