To Whom It May Concern…
The semis are wobbling and everyone is talking about Korea. No wonder we’re starting to see some concern. Just don’t call it panic.
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Yesterday I noted I did not have a good sense of sentiment when it came to the semis. Thursday the picture was even more muddied. Sort of.
Let me start with the semis since they are, of course, the index movers of this market. I would now categorize the view as folks are moving toward concerned. Everyone is talking about Korea and the Kospi. They are focused on the moves the Koreans have taken to reign in the speculation (no more levered ETFs).
They are focused on the breakdown in the Kospi itself. And now they are starting to quote various semiconductor stocks. For example, did you know (insert semi stock here) is down 30% from the high? Or (now they tell us) Micron (MU) earnings was a sell-the-news event. Then of course there is the, “Helene, did you see the head and shoulders tops in the SOX?”
I wouldn’t call it fear nor would I call it panic. For now I call it concern but Thursday was the first day I saw the concern.
Then there is the chart itself. It is still hovering at this 12,000 area. That is the high in-mid May and the low in June. Nothing broke on Thursday, thus how can we call it panic? We also can’t call it panic when the QQQs traded 35 million shares on the day.
As of now the SOX is hanging on by a thread. It has not made a lower low yet. As I said yesterday (and yes I say this all the time) I like hysteria. Maybe we get there in the next few days.
In the meantime the overall sentiment front is leaning giddy. Yesterday we discussed the Investors Intelligence bulls at 55% and the bull/bear ratio at 3.3. I was (and am still) hopeful that the semis can have an oversold rally next week to get that ratio higher, closer to 4.0.
But now we have the American Association of Individual Investors (AAII) who have, seemingly out of nowhere, gotten bullish again. The bulls are at 45%, the highest since late June (and mid-May before that).
The bears are down to 33% which doesn’t seem like a big deal when you consider the Investors Intelligence bears are at 16.7%, yet that is the lowest reading since February for the bears. The reading of bulls to bears is now the highest since January. So let’s call this indicator “too bullish.”
Then there are the folks at the National Association of Active Investment Managers (NAAIM). Each week they report their exposure to the market and this week it chimes in at 95. Again, an extreme would be 100 or greater, but 95 is knocking on the door of giddy.
It seems I went on vacation and everyone got bullish! And still the S&P 500 sits at 7500.
