The 2 charts below show the trend of the smart money (black line) and the trend of the dumb money (yellow line-small traders) for the SP 500.(traders commitment)
On the first one you can see that the smart money became short in mid 2000.
In the second one you can see that the smart money were selling equities since end September 07 and became short recently.
La plupart des grandes banques se basent sur un scénario macro économique pour anticiper une hausse ou une baisse des marches d’actions.
Pourtant on lit et on entend souvent que la bourse anticipe l’économie.
Les deux graphiques ci-dessous sont une façon objective de répondre à cette importante question.
Ils comparent le S&P composite et le cycle économique mesuré par le “National Bureau of Economic Research”(http://www.nber.org) depuis 1900.
Les lignes verticales rougent indiquant les contractions (points bas) et celles en bleues les expansions (points hauts) du cycle économique en cours.
Pour l’indice, les flèches rouges indiquent les creux et les bleues les pics.
On peut clairement remarquer que la bourse anticipe bien l’économie dans la plupart des cas.
Les trois seules exceptions en plus de 100 ans se sont produitent pendant les deux geurres et en 2001.
Les graphiques et les commentaires sur les graphiques proviennent de M.Elio Zammuto.(http://www.the-intermarket.com) 
According to this chart coming from Morgan Stanley, investors psychology (technical analysis) is definitely something to watch in those market conditions.
US consumer confidence fell more than forecast in February to the lowest level in five years as the labor market cooled and the economy faltered.The chart below compares the SP500 in yellow and the Consumer Confidence index.
La matrice ci-dessous est un outil stratégique (et pas du"market timing") qui me permet de quantifier le trend et le risque return des différentes classes d'actifs.En voici la légende : SXXP=Stoxx 600 Yield = taux 10 ans allemand M=métaux industrielles CRB=matières premières EUR= €/$ AGRI= matières premières agricoles.
Euribor 1 M rises close to a 7 year high.
Many thanks to Arthur Hill for this interesting comment concerning sentiment analysis on the greenback.
On the lighter side of analysis.... you can even thrown in a few magazine covers for good measure.
Der Spiegel, Knack and The Economist all featured the falling $ on their covers this week.
The Economist has featured the falling dollar before - so no big deal here.
However, we must be close to a bottom if Der Spiegel and Knack are featuring the falling greenback.
And don't forget about the rapper (Jay-Z) and the Brazilian supermodel, who have suddenly become currency experts by shunning the dollar.
US consumer confidence decreased today to 87.3.
This is worrying for the US equity markets because this indicator (black line) is strongly correlated with the SP 500 (yellow line).
Also note that the capacity util. Index (green line) is also strongly correlated to the SP 500.
The AAII ratio (red line) decreased to the lowest level since May 2006 (high pessimism)
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Remember that chart (decennial pattern-years ending in 7-sending in October), 
A few months ago I publish a chart about the decennial cycle of years ending in 7.
Last week the US market produced a "Hindenburg Omen" (HO), which could be an early warning signal of a bigger correction.
The Hindenburg Omen is a technical analysis signal that attempts to predict a forthcoming stock market crash.More infos :http://en.wikipedia.org/wiki/Hindenburg_Omen
The US small traders (dumb money) seem to be expecting some kind of crash again.
In the S&P 500 futures and options, they now have a larger net short position as a percentage of the open interest than at any time since 1995.
May be good news for the end year rally!
The reaction to the Citigroup and UBS news might indicate that investors were expecting a lot worse.
Moreover, the news puts forth more information related to the subprime, suggesting some uncertainty is removed.
As you can see on the 2 charts below, those stocks are trying to rebound (base building) from a very oversold situation.(lots of green arrows)
Strong volumes may also indicate an accumulation phase.
Finally, yesterday was the start of the fourth quarter, a bullish seasonal period for stock.
In terms of US sentiment indicator, one very bullish signal occurred last week. In fact, Commercials (usually right) have closed lots of short futures positions and are now net long in absolute terms
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Interesting study coming from Bespoken (http://bespokeinvest.typepad.com/bespoke/)showing the historical bull and bear markets of the SP 500.
The Stoxx 600 remains in a bearish correction.The table below shows that only 22% of the members of the index are trading above the 20 day moving averages, 9% above the 50 day MA and 28% above the 200 day MA.
A few months ago I publish an interesting chart about the decennial cycle.
Please find here an update were you can see that years ending in 7 have always be difficult over the last 100 years (in average -3.8% for the Dow Jones) and what is more worrying to me is that the selloff often starts in the second part of the year.
Since the top of the market in June US equity strategists (yellow line) have raised their stock allocations 3 times.
Is this a contrarian indicator?
