First Coverage's  Instablog

With Halloween less than a week away, it seems quite appropriate that this market is ready to play with the fears, worries and anxieties of industry professionals everywhere. Even as earnings season blew the doors off what most had anticipated, sentiment didn’t budge from last week and those in the know reacted with a collective yawn.

One of the problems when you’ve been in love with the market for so long (going on seven months now) is that you become harder and harder to impress. Traditionally, there had been a dip in sentiment as we came into earnings season as market professionals hoped for the best, while secretly preparing for the worst. Not so this time. Sentiment rallied into earnings announcements, which meant we were left with what is referred to in show business as a ‘tough crowd.’ And, even with all the impressive numbers that have recently been posted…that tough crowd remained unmoved.

Now, we’re not saying that the rally is all of sudden over. After all, sentiment not increasing is not the same as sentiment decreasing. And, as we’ve been consistently reporting for the last two months, we still believe that based on the data we’re tracking, too many people have too much of a vested interest to finish 2009, with bonuses and performance numbers intact, to let the rally just peter out without any large negative catalyst. However, that being said, sentiment is a fickle beast, and we need to remain alert at all times for any indications that the mood of the crowd might be getting surly…and traditionally we’ve always looked to Technology and Financials to gauge the temperature of the masses, and this week…not so hot.

Technology suffered a 7% decline in sentiment.

This was the largest single week decline since the lazy, hazy days of summer.

This could be indicative of many things -- some as benign as retracing part of the large gains we’ve made in technology sentiment over the last few weeks; some as significant as indicating a lowering of risk appetite post earnings announcements.

Other reasons for the dip could include a general dissatisfaction with the numbers that companies just posted or a belief that the fundamentals of the industry don’t support current valuations. For those who are looking for a worst case scenario, it could also mean that those who have been buying these stocks non-stop for the last seven months have had enough and are moving on to greener pastures with less risk. One week doesn’t make a story, but it does make an interesting data point that we’ll continue to watch. In the meantime, the good news is that when we look to Financials to see if there was a similar decline in sentiment over the last week, we didn’t see it.

Over the last week, the following stocks had the largest bullish and bearish sentiment shifts amongst the sell-side.

Bearish:



Until next week …