Market Vane Sentiment Survey - Treasury Bonds

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APPLICABLE TIME FRAME(S):  

INTERMEDIATE

UPDATE SCHEDULE:

Each Saturday morning by 11:00 AM EST

REPORTING DELAYS:

One week, so the most recent update will be at least one week old.

EXPLANATION:

The Market Vane Bullish Consensus is compiled daily by tracking the buy and sell recommendations of leading market advisors and CTA's (Commodity Trading Advisers) relative to a particular market. The advice is collected by:

1. Reading a current copy of the market advisors' market letter.

2. Calling hotlines provided by advisors.

3. Contacting major brokerage houses to learn what the house analyst is recommending for the different markets.

4. Reading fax and e-mail sent from advisers.

The buy and sell recommendations from each advisor are tracked during the day to verify the entry and exit of each trading position. The Bullish Consensus is compiled at the end of the day to reflect the open positions of the advisors as of that day's market close. 

The Market Vane consensus number of bullish advisors is posted each week in Barron's.

GUIDELINES:

Like most sentiment indicators, the percentage of bullish CTA's in the Market Vane survey should be interpreted in a contrary manner.  Very high levels of bullishness often leads to the opposite market behavior - a decline in bond prices and rise in yields.  Conversely, when the bullish percentage is extremely low, then that means pessimism is high, traders have probably already sold their positions, and bonds may be due for a rally (and yields decline).

STATS:

*Standard Deviation.  See below:

68% of readings (1 standard deviation) should be between 38% and 70%

95% of readings (2 standard deviations) should be between 22% and 86%

99% of readings (3 standard deviations) should be between 6% and 100%

In other words, we should expect a reading under 22% or over 86% approximately 13 times per year.  Since such a reading would be relatively unusual, it suggests that we may be seeing an unsustainable trend.  These figures assume a normal distribution curve.

ADDITIONAL RESOURCES:

Market Vane Corporation (www.marketvane.net)

Barron's (www.barrons.com)

© 2005  Sundial Capital Research, Inc.  All Rights Reserved.