ISE Sentiment Index
(ISEE) usually has the reverse relationship the stock market. When ISEE shows
extreme bullishness, the market might already have reached the top, likewise. As an
individual investor, we had better watch this indicator to make profit or reduce
loss from the stock market.
We checked the 5 highest
ISEE readings. The highest reading occurred on 12/17/2002 with 415. The S&P
500 corrected immediately from the high with a 3% loss. The second highest took place on 1/20/2004
with a reading of 304. The market did not pull back immediately. The high ISEE
readings, 256, 218, 229, and 187 occurred respectively during 1/21/2004 through
1/26/2004. The market actually pulled
back after that.
The day 11/25/2005 had the third highest ISEE index
marked by a reading of 295, and the fifth highest ISEE occurred on 8/3/2005.
Then the market pulled back immediately from its high. The fourth highest ISEE fell on 12/27/2004,
but the market did not take immediate action until four consecutive days later.
The ISEE ranged between 177 and 278 before the market dived.
On the other hand, the lowest ISEE reading 41 presented on 6/20/2013. On
that day, the market did not bottom out until 6/24/2013 (June 22 and June 23
fell on weekends). Since then, the S&P gained from 1573 to 1706. On
8/1/2013, with 8.5% accumulative appreciation from 6/24/2013, the S&P 500
recorded an all-time high.
The second lowest reading 50 was on 12/1/2011, but the market bottomed
out on 12/19/2011. This was a market recovery failure. There were ties for the
third place, 9/28/2011, 7/10/2012 and 4/1/2013 with a reading of 53. On 9/28/2011, ISEE reached a pretty low
level. The market bounced from low two days later. The same situation happened
on 7/10/2012. The ISEE reached 53 as the third lowest reading on 4/1/2013. The
market continued to consolidate for three more days, before it reversed.
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