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Investor Sentiment: The Pullback Will be Bought
The easy part was the bounce. The hard part was knowing that the SP500
was going to gain nearly 5.5% in one week. Did you know? Not me.
Anyway, last week is, well, last week’s news, and in the markets, the
question always is “what’s next?” With the “dumb money” still extremely
bearish, I suspect those sitting on the sidelines –and there are a lot
of you — will be angling for entry points on any pullback (if that
should occur). I am still a bit concerned that the rally won’t go
beyond a couple of weeks or stated differently, I don’t see last week’s
blast off as the start of a multi – month up trend. Although the “dumb
money” was very bearish (i.e., bull signal) a week ago, none of the
other sentiment indicators were in alignment. For example, corporate
insiders were not buying to any great degree. Since 2004, the best,
most sustainable market moves come when there is a consensus amongst the
sentiment indicators.
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 extremely bearish, and this is a bull signal.
Figure 1. “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: “Transactional volume declined significantly as the quarter wound down and companies closed trading windows. Sellers maintained a narrow edge over buyers, however, both of our key sentiment flashed green indicating positive sentiment. More insiders will be moved to the sidelines during the coming week as the quarter official closes. Transactional volume will continue to slow down and it won’t be until earnings season that we get another macro tell.”
Figure 2. 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 indicatoris 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.
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 indicatoris 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 59.97%. Values less than 50% are
associated with market bottoms. Values greater
than 58% are associated with market tops.
indicator is 59.97%. Values less than 50% are
associated with market bottoms. Values greater
than 58% are associated with market tops.
Figure 3. Rydex Total Bull v. Total Bear/ weekly
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well if you're looking for a 'dumb money' indicator i'm it! ...or at least was because i was listening to the dumbest indicator of markets 2009-2011 Rob Prechters Elliott Wave retards who got it completely wrong for nigh on 14 out of months!!!
Anyway talking of dumb is that a Head & Shoulders pattern forming or am i up too late, drunk too much coffee and seeing things!
The market might have gone up 5 1/2%, but it did it on vapor volume. Check the weekly volumes the last 2 years on weeks of big moves. Nothing but the fed.
What is a 5.5% rally in one week usually followed by? You can BTFD. This thing is gonna tank! It may wobble up some more before it does but not much.
Soon the "insiders" will be in running gun battles in these United States. This "criminal Ilk" and the rest as this author and those that cheerlead for "mahkets alwayz goes uppeddss" are also in for an Italian Necktie or a bullet wound to the head.
This shit is getting just a bit much, even for the criminals. They are even shaking thsir heads.
5.5% in ONE FUCKING WEEK?!?!?!?!?
Are YOU FUCKING KIDDING ME???
And these are the same idiots that made CDO's, MBS, CDS and the rest of the financial shit that ruined the markets. AND the SAME idiots that thought there was nothing wrong with Bubbles, ZXIRP, Money Printing, and there was no "recession in 2007-08" until it was too late??? THOSE FUCKING IDIOOTS THINK THIS IS OK?????
FUCK THESE ASSHOLZ. People are starting to get pissed, and just look at Greeece, we are next, Don't really care what Cullen Roche thinks he is ignorant and arrogant.his shit is enough and the economy is in recessiona and alwqays has been.
No, no, no, no...you have to look at the charts and the dumb money indicators. It's all bullish, bro.
Man, you just don't get it. You just need a little "premium content" to get a better understanding on the 'technicals' in play.
/sarc
What "insider" buying selling has to do with algorithmic trading escapes me. How 'bout a chart of that showing entries and exits?
Jesus Christ, can you make this article more amateurish and worthless. 'Indicators', "dumb money" or otherwise, don't mean a god damn thing in a 100% controlled game. Furthermore, it sure-as-shit isn't a 'bull signal'.
You want to know why I didn't 'know' that the S&P 500 was going to be shoved up 5.5% in a week? Because I don't work for the fucking FRBNY or the US Treasury nor any of the Primary Dealers bidding up the god damn equities.
Now, back to that 'technical anaylsis' bullshit...
Hey Purdue:
If you go back (which I doubt you won't because it is too much trouble) and look at recent articles I have put up on this site, you will see the record. However, the point isn't to say I was correct in my call, but whatever opinions I might have are founded in data. Yes, you get lucky -- no one calls them all correct, but your opinion is worthless if you don't base it in some foundation.
You posted the same shit on the first post. I accidently replied there instead of here. In any event, it applies here also.
+1
Can it be said any better?
Insider information used to refer to a tip from a friend who had news before it was public. Now it means anyone who gets the morning memo from Timmy G and the Squid.
simple answers are usually the best in todays "lie infested" market economy...
I think the "dumb money" is anyone who invests in the rigged game that many still want to believe is a free market. You'll do well at the races if you have a wire-tap on the mob. Otherwise, not so much.
No shit. It's like saying that every NFL game is part of a point shaving scandal. Now, just guess which one is going to kill the spread and enjoy your winnings.
Really, the bounce was the easy part? I think you're gonna find a lot of people's P&L disagreeing with that statement.
spot on love your analysis. The guy from http://www.forecastfortomorrow.com/trading-club stated today taht we are at some critical resistance points and posted a chart of the trannies, hmmm intersting. His stuff is killer. Can see a case for both sides, but I am more wondering if they have a plan for screwing the bulls partying here. Hmmmm. Greece is not the only one in trouble.
D: If you go back (which I doubt you won't because it is too much trouble) and look at recent articles I have put up on this site, you will see the record. However, the point isn't to say I was correct in my call, but whatever opinions I might have are founded in data. Yes, you get lucky -- no one calls them all correct, but your opinion is worthless if you don't base it in some foundation.
That's interesting. I also read another article by "TD" in which he/she cited the high amount of short interest and the strategic and relentless squeeze applied by the goons at the FED. But, you know, those charts and 'indicators' are kick ass too. I'll bet I could better understand with a paid subscription.
When you can describe technical anaylsis, logically, and why in the hell it has significance...then I'll listen and believe. Because, quite frankly, it sure looks like a bunch of Monday morning QB shit to me with a success rate of about 50%...OK, 52%. Take about foundation-less drivel.