Archive for the socionomics Category

Capitulating Bears Send Short Sales to Three-Year Low in Aging Bull Market

Posted in socionomics on 2011-02-28 by Strategesis

From Bloomberg:

The biggest Standard & Poor’s 500 Index rally in more than five decades is forcing stock market bears to abandon short sales, cutting them to the lowest level since 2007 last month.


“The time to buy is when the blood is running in the streets.” — Baron von Rothschild.

“The time to sell is when the champagne is running freely.” — Strategesis


Investor Sentiment: An Alternative Interpretation

Posted in education, socionomics, technical analysis, technical indicator on 2011-02-27 by Strategesis


I have often contended that there are two ways to interpret sentiment data. The first is as a contrarian. Figure out when too many investors are on one side of a trade and bet the other way. This is the “traditional” way most interpret this kind of data. The second method of interpretation is based upon the fact that investor sentiment will track the movements of price. So as prices move higher, we would expect bulls to increase; as prices move lower, we would see investors express their bearishness. It is the rare situation (believe it or not) where investor sentiment and price actually deviate. To read more on variant uses of sentiment click here and here.


Crowds and Credit

Posted in education, fundamental analysis, liquidity analysis, price chart, socionomics on 2011-02-05 by Strategesis


Manias are fascinating to study in history, but are hard to accept if you are living through one. The most memorable ones in history require two elements, crowds and credit. While today’s global markets are littered with some of the most complex financial instruments in history, anyone studying the history of financial markets quickly recognizes that many of today’s tools for speculating on future price movements can be found as far back as the Amsterdam Exchange, founded in 1610. This exchange allowed speculators to take out margin loans, invest in shares of the East India Company, and purchase futures contracts on tulip bulbs. That’s right; tulip bulbs.