• 749 days Will The ECB Continue To Hike Rates?
  • 749 days Forbes: Aramco Remains Largest Company In The Middle East
  • 751 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,151 days Could Crypto Overtake Traditional Investment?
  • 1,155 days Americans Still Quitting Jobs At Record Pace
  • 1,157 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,160 days Is The Dollar Too Strong?
  • 1,161 days Big Tech Disappoints Investors on Earnings Calls
  • 1,162 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,163 days China Is Quietly Trying To Distance Itself From Russia
  • 1,164 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,167 days Crypto Investors Won Big In 2021
  • 1,168 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,169 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,171 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,171 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,174 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,175 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,175 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,177 days Are NFTs About To Take Over Gaming?
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

  1. Home
  2. Markets
  3. Other

Investor Sentiment: Still Bullish

Despite last week's big jump in the equity markets, the "dumb money" remains bearish on equities. These investors appear to be reluctant and still on the sidelines. The "smart money" is still bullish. This is a bullish alignment of signals suggesting that dips will be bought.

The "Dumb Money" indicator is shown in figure 1. The "dumb money" looks for extremes in the data from 4 different groups of investors who historically have been wrong on the market: 1) Investor Intelligence; 2) Market Vane; 3) American Association of Individual Investors; and 4) the put call ratio.

Figure 1. "Dumb Money"/ weekly

The "smart money" indicator is a composite of the following data: 1) public to specialist short ratio; 2) specialist short to total short ratio; 3) SP100 option traders. The "Smart Money" indicator is shown in figure 2.

Figure 2. "Smart Money"/ weekly

A 10% "pop" in one week, and the "dumb money" still remains bearish (i.e., bull signal). Maybe they know something? It doesn't seem likely as they (i.e., the "dumb money") were holding on since the January, 2009 highs and hoping that the November, 2008 lows would hold. Woops!! That didn't work out. It appears that the "dumb money" threw in the towel at the wrong time.

In any case, the "Smart Money" and the "Dumb Money" indicators remain bullish, and it is my belief that dips will be bought. After a 10% up move in a week, one would expect the market to pullback, but often times in the markets, there is a gap between our expectations and reality. The pullback will be bought. However, I just don't know how deep or shallow the expected pullback will be.

 

Back to homepage

Leave a comment

Leave a comment