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Investor Sentiment: They Don't Ring A Bell At The Top
There are two kinds of bulls: 1) there are those bulls who are intent on squeezing every last percentage point from this rally and who believe they can find the exits when the music finally stops; and 2) then there are those bulls who continue to have high expectations that the current market environment will yield strong returns. The latter type of bulls are unlikely to realize strong gains without a significant pullback, and by significant I mean that the pullback should get investors to think that the market is rolling over to such a degree that the current cyclical highs will never be revisited. The former type of bulls are likely overestimating their ability to get to the exits or identify the top before the next trader. Either way, complacency reigns as they don't ring a bell at the top.
The "Dumb Money" indicator, which is shown in figure 1, 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. The "Dumb Money" indicator shows that investors remain extremely bullish.
Figure 1. "Dumb Money" Indicator/ weekly
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The "Smart Money" indicator is shown in figure 2. 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 neutral to bearish.
Figure 2. "Smart Money" Indicator/ weekly
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Figure 3 is a weekly chart of the S&P500 with the InsiderScore "entire market" value in the lower panel. Due to the start of earnings season, insider trading volumes remain light.
Figure 3. InsiderScore Entire Market/ weekly
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Figure 4 is a daily chart of the S&P500 with the amount of assets in the Rydex Money Market Fund. When the value is low, investors are fully invested and remain complacent; when the value is high, investors are fearful and seeking safety of the money market fund. The current value is the lowest value since the March, 2009 rally began.
Figure 4. S&P500/ Rydex Money Market Fund/ daily
But they did ring the bell at the bottom....
Free money to the banks in every which way..........
To lever the system....
When will this ever happen again ?
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And the bell is dinging at the top....
The free money is not sustainable....
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What could change the picture to the upside....????
Favorable US tax structure change....
The odds of it happening ? Maybe the next bottom bell ringer ?
Daily charts of key equity indexes are very bearish after being overextended for too long.
Is the March 2009 bear market rally ending ?
My ongoing USD bull and EURO bear warnings continue.
The USD weekly chart continues to give bullish warnings and vice versa for the EURO.
http://www.zerohedge.com/forum/market-outlook-0
The phrase is, "The Don't Ring The Lutine Bell"
Look it up...interesting history.
How could the market crash if the FED owns it through the Banks?
Are the banks the ones fully invested?
When do the banks have to pull out? (When they're through!)
Don't "they" make the rules? And the money?
Stupid times...stupid questions.
What if the reason people are drawing down their Rydex money market accounts is that they need the money to pay mortgage payments, because they're still out of work?
They don't ring a bell at the top.
Crap. I thought this was going to be about gold.
Coulda swore I heard something.
i watched this bulls/bear ratio in the summer and they were constantly predicting end of the rally. those technical parameters do not work if someone keeps adding freshly printed money to the market.
The Banking Oligarchy Must Be Restrained, and the US Is Lagging Reform
Despite Obama's recent brave words, the US is badly lagging the world recognition that because of systemic distortions in the financial system the banks are in fact exercising a tax on the real economy that is impeding global recovery.
"...as long as they are not addressed, the banks will make profits – or more accurately, extract rents – out of all proportion to any contribution they make to the wider economy."
The US is going in absolutely the wrong direction, lessening competition through its policy of focusing relief efforts on a small group of Too Big To Fail Banks.
Why this sort of response from the reform government? The answer most likely is centered on three men: Larry Summers, Tim Geithner, and Ben Bernanke. None of the three has practical experience in business. All three are creatures of the banking system, and are heavily indebted to the status quo.
The first practical step for Obama would be to dismiss Summers and Geithner, and to encourage the Congress to mount a significant investigation into the Fed's actions, and tie this to Bernanke's reappointment to the Chairmanship.
The most recent scandal regarding the collusion between the government and the Fed to mask the backdoor bailouts to a few big banks via AIG should be proof enough that the Fed has no intentions of acting honestly and openly, and is far exceeding its mandates in its aggressive expanding its balance sheet and the selective monetization of private debts.
There are disturbing indications that the US is using a few of its large banks as elements of its policy to achieve certain objectives in the world markets. Such collusion between the corporate and the government sectors is the prelude to fascism.
We should keep in mind that financial crisis was indeed created during both Democratic and Republican administrations, and that simply replacing the Democrats with traditional opponents is unlikely to achieve genuine change.
Change is what is required. But while the foul stench of corruption hangs over the political process in Washington, where Big Money readily buys influence and control over legislation and regulation, there will be no significant changes, and no economic recovery. Recovery will be in appearance only.
talking about bells at the top - how about this one at the bottom last March:
Bullish Obama Suggests Nation Should Buy! Buy!March 03, 2009 1:29 PM
President Obama told Americans to take a look at investing in the stock market this afternoon, a remarkable utterance for an American president, especially as the Dow Jones Industrial Average proceeds on its course Southward.
http://blogs.abcnews.com/politicalpunch/2009/03/bullish-obama-s.html
Never EVER underestimate the replacement power of equities within a global reflationary spiral. Think Zimbabwe.
Never EVER underestimate the gobbledegooky clutterous apparitional incoherent guesstitude. Speak simply and clearly.
Extremes just keep getting more extreme.
to me, figure 1 reads smart money as from may 2008 (BRIC top) till march lows it was bearish.
figure 2 looks more like a dumb money indicator.
I didn't get it.
(I'll give you another indicator: see "buy stocks" on google insights tool, that seems to be a good coincident for market bottoms, it hit EM bottom for oct/08 and SPY march low, just like your figure 3)
No bell; it's a TKO!
My boss says complacency kills.
Bulls go Moooooo!!!!!!
Buy Silver.
I like how your "dumb money" indicator completely fails to catch the continuation of the rally in mid-July.
I suggest removing the word "money" and just calling it the "dumb indicator" for improved accuracy.
Seriously, why are you wasting my time with this crap?
If you are looking for an indicator that catches every twist and turn and does so with great precision, I would give up. Since I have been posting these indicators on ZH, I have gone to great lengths to stress that 1) that it takes bulls to make a bull market and the current situation of too many bulls with rising prices has occurred about 3 in 45 signals over 18 years; 2) since the lows in March when the indicator "flashed" a buy signal, the SP500 traveled 32% until the first extreme reading; 3) since the first extreme reading in July until now the SP500 has only gone 14% or so; 4) since August, I have continuously stated that the market would have an upward bias but it would be imperative to buy at the lows and sell at the highs to extract any money from the market - I think that would describe this market; 5) lastly it has been within the last 6 weeks or so that I have come to expect increasing risk of a down draft
Once again, for those out there with crystal balls or who know they can get to the exits before the music stops, then please have it.
accept deez nutz as your savior
Frankly, I remeber reading the dumb and smart money even when the market was at 800-900 level,and it still charged on. I honestly beleive that this is a political issue and has nothing to do with TA P/E or real valuation(if you ask me, I think 600-700 is a much more real valuation for the S&P,but then again I have always thought that the market is overvalued). So I believe it will take a much longer time for any crash scenario. Of course,then again and since it is a political issue,then any danger on the banx,would difinitely translate into a crash. Bottom line,it is up to the few institutions who make up the MM,and whether their end year bonuses are secured or not. And till now,I don't see any change to th staus quo...........
Why does it have to be a crash? Markets correct all the time, except this one here. Are we to believe its not correcting because the fundementas are that good?
This market looks weak on both a fundemental and technical basis, it will correct. A natural retracement would take the SPY back to the July 13 low at 87.59...... That is about the "healthiest" thing this market could do right now. The real problem is the markets are sick and twisted just like the people that have the most influence on them.
Ah yes, March 2009. That was a time when banks were forbidden to book profits and hide asset losses. I remember it well.
They don't ring a bell at the top? Crap, time for a new strategy.
Actually, I think Obama and Bernanke ARE going to ring a bell at the top. It's part of this new style of capitalism where there are no losers, only winners. I expect to hear a bell at the top.
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Last one out the door, please turn off the light.
the best return on your money for 2010 is accepting jesus christ as your lord and savior.
:-) but how come your name is arnold but your avatar is a girl? must be a joke but I dont get it. how much money does it take to accept jesus? what kind of returns has he gotten in the past? is jesus a real name or a fictitious one like newscorp or blackwater? how does jesus get such good returns when satan (as he told jesus in their conversation in the desert) owns all the kingdoms in the world?
and the return on that is ?
About the same as 30-day T bills?
Avatars need to be much larger.
Yep. Like 8X10 glossies with a few wallet sized to boot.
Buy any dip that occurs before the next U.S. jobs report (February 5th). Investor sentiment is fickle, and complacency is good as we climb the wall of skepticism. Keep selling vol in this environment. It's risky but you will likely make steady returns in 2010.
You have to at least recognize that selling all new price highs has been profitable as well, so long as you didn't overstay your welcome on the short side. It's not as if there's tremendous follow-through on any new rally highs in the S&P.
Anybody know a good Witch Doctor?
SELL
Are you qualified to give investment advise? Of course it's risky. More risky than the 51.5/48.5 on craps and roulette.
"Buy any dip that occurs before the next U.S. jobs report (February 5th). Investor sentiment is fickle, and complacency is good as we climb the wall of skepticism. Keep selling vol in this environment. It's risky but you will likely make steady returns in 2010."
I've never heard anyone whose ability I respect make statements like these. This is the way my buddy (who is a dear friend but an absolute idiot when it comes to the market) talks.
Why would anyone make such a statement and post it to a board for the world to see? Ego? Lack of smarts? I don't get it.
Ego? No, don't need to boost my ego. I am calling it the way I'm playing it, the way I've been playing it for some time now. I've been buying the dips. The harder it dips, the more I buy. You can stick to investor sentiment, but I say the liquidity rally still has legs. As the fundamentals improve, this market will grind higher, more so in some sectors than in others. There will be hiccups along the way, but keep buying the dips. What don't you get about that?
Disclaimer: I put my balls on the table. If I am wrong, let the ZH cyber goons attack me. At least I am not afraid to call it the way I see it.
you are so full of shit, whenever someone busts you you never reply, so how have you kept buying the dips, you either were not fully invested,or are the greatest trader that each top you sell, or you are margined to the tit.
But I think you are just full of shit.
What a silly statement to make:
You can only ride a trend by cashing out at each peak or by increasing your risk.
Ermm...the first thing they teach you in trend trading school is to take half of your lots off at 1:1 risk:reward to put you in a free trade and leave your equity curve safe if there is a reversal.
Shit, I know traders who still haven't cashed EURUSD positions in from either the Sep 08 highs OR March 09 lows and somehow still manage to take new positions every week.
Someone here is full of shit, but it isn't Leo.
~The real Anonymous
Why even attack Leo? You don't even know him. Personally I don't like Leo's outlook on markets but I have read enough to respect his position. I certianly would not attack him just because I do not agree with him regardless if I thought he was cocky or not.
Thanks Burnbright, appreciate your comment. People who attack me here for stating my positions are the same losers who get on Yahoo message boards and insult people they don't know. They are internet pests.
Deep,
Read my comment above and if you think I am full of shit, come to Montreal and tell it to my face...DOUCHE!
your such a liar, in prior posts you claim you trade for a living.
FUCKING LIAR.
My profile clearly states I consult and trade for a living. I say "trade" but my "short-term" trades are few and opportunistic, and typically consist of holding postions for a couple of weeks, not minutes. I don't have the time nor the inclination to scalp markets all day long. My long-term portfolio remains heavily weighted in solar stocks. I don't need to lie. If I am wrong, I will admit it, just like I did on my optimistic call on the last US jobs report.
You know I love it when traders claim they are buying the dips. But in order to buy dips you gotta have cash or credit!
So are you selling each local high to get cash?
Are you steadily increasing your margin and leverage as this market goes steadily higher? That's a solid plan for the noobs to follow!! :(
Or have you been continuously under invested throughout this rally, thus having lots of cash all the way up? :-)
Telling people to buy the dips is like clapping with one hand!
Tell us what you are doing with that non-clapping hand you ain't talking about.
Mr Palladium,
I am not a fucking trader. I work for a living and use my income to buy those dips.
Fair enough Leo, but us mere mortals must pay some attention to portfolio structure, loss control, and adjust cash positions as markets rise, then lose momentum, and divergences begin to mount.
Not arguing with your call that the popular averages are likely to continue to make nominal new highs here for a while, its just that there are so many moving parts that commitment to directional calls can cause one to neglect the mundane necessities of life for one who runs his own money.
Your consistent good calls are always useful. ;)
Dr. K's ego is certainly healthy but unlike many posts and articles here on ZH, he has called this market including certain sectors to a tee. Ignore him at your peril.
yeah, he should have his own investment blog right? he should call it "boom, boom and boom".
I don't care what you do with your balls or your money, just like nobody cares what I do with mine.
Yeah, sounds like a 13 year old kid calling the market.