Monday, May 7, 2007

ISEE at 173 Intra-Day

I generally don't get particularly excited about intra-day sentiment numbers, but I was surprised to see that the ISEE jumped from a low opening reading of 108 to a relatively stratospheric 173 as of 11:30 EDT. The smaller sample size makes the first few readings of each day less significant, but I am now on notice to pay closer attention to this indicator as we move forward.

For the record, since August 2006 there have only been two closes above the 173 level: a 184 on 12/18 and a 175 on 1/16. Obviously, neither of those readings signaled an imminent top, but in three of the seven days just prior to the May 2006 top, we did see the ISEE close over 200.
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10 comments:

  1. Bill LubyMay 7, 2007 at 9:42 AM

    Call buying easing a little: 163 at 12:30 EDT.

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  2. UnknownMay 7, 2007 at 11:39 AM

    I noticed it too and faded NQ.

    The total put:call ratio was also pretty low this morning.

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  3. dkMay 7, 2007 at 2:07 PM

    The TOF Ratio ($COMPQ:$CPC) gave a similar reading this morning, and closed white-hot at 3672. Like the ISEE reading, it's not the End of Days, but it's problematic when option investors get so excited.

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  4. pleadershipMay 8, 2007 at 3:23 PM

    The ISEE is tricky. From what I can see from looking at the moving averages of the ISEE is that it does not have a lot of predictive value on signalling tops. It has seen the 10-day moving average over 200 in 2003, 2004 and 2005, and the market continued higher. If anything, at the moment the moving averages of the ISEE show that there is still concern (readings unable to get above 130 strongly) which is positive for bulls. For me, the ISEE seems to hold more value as a predictive indicator for locating market bottoms rather than market tops.

    Bill, just curious about your work into the PCVXO Sentiment Indicator. According to my work, it is still flashing a buy signal after it turned positive on March 28.

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