Are We Ready To Return To The High’s? – Justin Mamis Sentiment Cycle May Think So
Posted by lasertrader on December 18, 2011
Late last year I wrote a post about the Justin Mamis Sentiment Cycle. I won’t rewrite the details again but it can be read here . I like to use the S&P 500 / SPY charts as my proxy for the overall markets and like everyone else I have been sitting here trying to figure out where this market may be going over the next several weeks. Macro cross currents are dominating the news as well as our mindset keeping many out of the market, or leaning to the short side. As I was flipping my coin to make a guess I looked up at the wall over my desk and the chart of the Justin Mamis Sentiment Cyle caught my eye.
The similarity of the SPY/S&P 500 chart to the Mamis Cycle is uncanny. Lets first review the Justim Mamis Sentiment Cycle chart.
Now lets look at a chart of the SPY
The similarity is striking. Of course I’m not going to place a trade today on this, but if we break back over the green 200ma line again I think there is a very good chance we will revisit the previous highs quickly. I have seen this cycle play out enough times to feel there is a high probability of it working out once again. I am looking forward to seeing how this plays out.
Happy Holidays to all my fellow traders.
Trade With Pete (@tradewithpete) said
EVERY investor needs to memorize the Mamis Investor Sentiment Cycle. PERIOD. Great chart here. “IF” the markets are in the “Denial/Aversion” phase this is the full definition for anyone interested to keep an eye on for.
Wishing everyone Happy Holidaysl!
—————-
AVERSION TO DENIAL
Sustained directional trending action to the upside begins between the Aversion phase and the Denial phase. As the market slowly creeps up, the shorts start to sweat while those who don’t own a piece of the action vow to themselves that they will get in on the next dip that they believe is sure to come. The market continues higher and does not let them in.
More and more bids materialize as buyers show up again while shorts begin to cover. Since there are not many sellers overhead, the move up can be big and fast, and on low volume. If it keeps going, eventually those left behind in the dust have to get in again, and the loop continues.
lasertrader said
Pete, you may not have seen the tweets this morning from Helene Meisler at Real Money, TheStreet.com. She picked up on this post.
http://realmoney.thestreet.com/updates-and-conversations?published%5Bmin%5D%5Bdate%5D=2011-12-19+00%3A00%3A00&published%5Bmax%5D%5Bdate%5D=2011-12-19+23%3A59%3A59&author=26237
Justin Mamis is her Mentor and she called him. He confirms. The Twitter world is simply amazing as you pointed out last night.
Trade With Pete (@tradewithpete) said
Hi Bruce,
Excellent work there! If Mr. Mamis approves you must be doing something right. There is a reason why Ms. Meisler has been a writer at TheStreet for such a long time. Her technical analysis work is very well respected.
Time to laminate the sentiment cycle chart!
Let’s see in the next couple of weeks if the Denial phase pans out for the bulls.
Have a great day!
PS Also this a great example of “6 Degrees of Seperation” using Twitter, Pretty cool eh?
http://en.wikipedia.org/wiki/Six_degrees_of_separation
Mamis Investor Sentiment Cycle Market View said
[...] · Comments { 0 } Here is a great education article written by Bruce aka Lasertrader on where in The Justin Mamis Investor Sentiment Cycle the markets might be [...]
marketfeel said
Bruce,
I have been studying the Mamis Sentiment now for I believe a year. I have read one of the books by mamis and read countless interviews.
I believe that I have made progress in quantifying where we are in the cycle. I would like to collaborate with you on this
Tony
Tracey said
Thank you for sharing your thoughts. I really appreciate your efforts
and I am waiting for your next write ups thank
you once again.
Tracey