"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 9 hours Meet The Hedge Fund Billionaires Club
  • 10 hours The Next Housing Crisis Could Be Right Around The Corner
  • 11 hours Cartel's, Pirates And Corruption Cost Mexico $1.6 Billion Per Year
  • 12 hours Africa’s Fastest Growing Economy
  • 13 hours The Blockchain Boom Hits The Utilities Sector
  • 15 hours Why Smart Money Is Selling Off Right Before The Bell
  • 17 hours Tech Giants Rally Ahead Of Earnings Reports
  • 1 day Global Debt Hits 225% Of GDP
  • 1 day The World’s First Trillionaire Will Be A Space Miner
  • 1 day How Student Debt Could Cause The Next Real Estate Crisis
  • 2 days This $550 Billion Industry Is Betting On Bitcoin
  • 2 days One Commodity Set To Soar On Russian Sanctions
  • 2 days China’s New Car-Market Rules
  • 2 days Oligarch Risk: The New Red Flag For Investors
  • 2 days Five Things To Consider Before Investing In An IPO
  • 2 days Investors Bullish As Earnings Season Kicks Off
  • 2 days Nearly One-Third Of U.S. Lottery Winners Declare Bankruptcy
  • 3 days Is Facebook Still A Buy?
  • 3 days Will Blockchain Stocks Ever Bounce Back?
  • 3 days Geopolitical Tensions Fail To Boost Gold Prices
Could Tesla Be Profitable By The End Of 2018?

Could Tesla Be Profitable By The End Of 2018?

Tesla has struggled to get…

Tech Giants Rally Ahead Of Earnings Reports

Tech Giants Rally Ahead Of Earnings Reports

Earning season has just begun,…

One Commodity Set To Soar On Russian Sanctions

One Commodity Set To Soar On Russian Sanctions

The recent sanctions on Russia's…

Investor Sentiment: We Have Beaten This To Death

I have definitely beaten the sentiment topic to death.

And there is nothing new to add to the numerous posts in recent weeks on this topic. The sentiment picture remains consistent with a market top. The market swoon in April and May did not produce a great deal of bearish investor sentiment even though the SP500 dropped about 10%. Thus the ensuing bounce should not be all that great. Hopes of QE, bailouts, and central banker intervention were prevalent as prices moved lower, and investors have been rewarded as prices are back above the "all important" 200 day moving average. Beyond that we should be closer to the end as opposed to being on the launching pad for a new bull market.

A list of posts follows:
Investor Sentiment 3 Pack
Investor Sentiment: In a Pickle
The Odds Are Against You

The "Dumb Money" indicator (see figure 1) looks for extremes in the data from 4 different groups of investors who historically have been wrong on the market: 1) Investors Intelligence; 2) MarketVane; 3) American Association of Individual Investors; and 4) the put call ratio. This indicator is neutral.

Figure 1. "Dumb Money"/ weekly
Dumb Money Weekly

Figure 2 is a weekly chart of the SP500 with the InsiderScore "entire market" value in the lower panel. From the InsiderScore weekly report: "Market-wide insider sentiment was Neutral last week as insider trading volume was seasonally low. Most insiders continue to be prohibited from transacting purchases or sales until after their respect company's Q2'12 earnings announcement. As such, volume will remain light for another two to three weeks."

Figure 2. InsiderScore "Entire Market" value/ weekly
InsiderScore Entire Market Value Weekly

Figure 3 is a weekly chart of the SP500. The indicator in the lower panel measures all the assets in the Rydex bullish oriented equity funds divided by the sum of assets in the bullish oriented equity funds plus the assets in the bearish oriented equity funds. When the indicator is green, the value is low and there is fear in the market; this is where market bottoms are forged. When the indicator is red, there is complacency in the market. There are too many bulls and this is when market advances stall. Currently, the value of the indicator is 65.73%. Values less than 50% are associated with market bottoms. Values greater than 58% are associated with market tops. It should be noted that the market topped out in 2011 with this indicator between 70% and 71%.

Figure 3. Rydex Total Bull v. Total Bear/ weekly
Rydex Total Bull versus Total Bear

 


TheTechnicalTake offers a FREE e-newsletter: HERE

 

Back to homepage

Leave a comment

Leave a comment