Is This Widely Ignored Indicator Signaling Investor Complacency?

Tyler Durden's picture

Via Dana Lyons' Tumblr,

There has been a recent spike in the number of Unchanged Issues which has, at times, signaled too much investor complacency in the past.

As readers are aware, our biggest stock market concern in recent weeks has been focused on the widespread overly bullish sentiment. Today’s Chart Of The Day presents one further example of potentially too much complacency on the part of investors – at least prior to today’s market plunge. Perhaps the most disregarded yet widely disseminated market statistic is the number of Unchanged Issues on the exchanges on a given day. Everyone focuses (rightly so) on Advancers and Decliners, but mostly ignores the Unchanged Issues. We mostly did as well, until we began to chart them more closely a few years ago.

Interestingly enough, we found that spikes in Unchanged Issues can be a sign of complacency while low levels can indicate elevated fear on the part of investors. These signals can be valuable on a contrarian basis when identifying potential bottoms and tops in the market. If you think about it, when market fear is high – at bottoms – volume is elevated and stocks of all stripes are on the minds of investors. When markets are rising – or stagnant – some issues, especially lightly traded ones, may slip investors’ consciousness.

I know many folks may find this notion a bit of a reach, or just downright goofy, but take a peak at the chart below. When tracking Unchanged Issues on the NYSE (using a 25-day average), we have seen that spikes have tended to occur near intermediate-term market tops. It is not a foolproof signal, but elevated numbers of Unchanged Issues showed up near tops in June 2007, April 2010, April 2011, September 2012, September 2014 and May 2015.

The concern currently is that NYSE Unchanged Issues as a % of All Issues is at its highest level in more than 10 years.



So is this signal a valid red flag? And has today’s action taken away some of the sting? (By the way, we regret not being able to post this prior to the day’s action – sometimes our client and subscriber responsibilities preclude more timely posts, however). The signal does fit with most of the frothy sentiment readings currently (yesterday’s post highlights one exception). If indeed we are witnessing a peak in this Unchanged Issues indicator, today may be just the beginning of at least an intermediate-term (i.e., weeks-months) slide in the market. At least, that would be the suggestion based on prior spikes.

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More from Dana Lyons, JLFMI and My401kPro.

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I am a Man I am Forty's picture

Hey!!  What are the markets gonna do tomorrow??

Ironmaan's picture

They will benefit and obey the powers that be, thats what.

wildbad's picture

dunno man..felling a little complacent

DontGive's picture

It will probably be ok.

This time it's different....

I am a Man I am Forty's picture

Do you think Hillary collapsing in the street will be bullish??  I'm thinking NOOOOOOOOOOOOOOOOOO!!!

Theta_Burn's picture

Crickets chirping in this thread..

The planet is watching the latest episode of its a beautiful day in NY, medical-episode16, where hil is dragged to a van, twitching, but everything continues on, A-O-K...


atomp's picture

Sports! Sports! Sports!

buzzsaw99's picture

i ain't selling shit. even the car salesman was giving me investment advice yesterday. he said: you have to own stocks these days. i believe him.

Captain Chlamydia's picture

An old Wall Street saying has it that when everybody’s getting into the market and even the shoeshine boy is giving stock tips (or the barber/hairdresser or the taxi driver or the waiter or the bartender), then it’s time to sell. 

Supposedly, Joseph P. Kennedy (1888-1969) knew that it was time to get out of the market in 1929 when his shoeshine boy began giving him stock tips.

Heterodox economics's picture

Back in 2000, I used to read Investor's Business Daily on the train.  On two different occasions, a stranger noticed me reading Investor's Business Daily and struck up a conversation with me about the markets.  

We all know what happended in to the stock market the year after that.

Chuck DeBongo's picture

At the moment we have:

  • negative yielding bonds.
  • negative yielding bank accounts.
  • stocks at all time highs.
  • money being printed at high rates.
  • overpriced housing.
  • record debt levels.

And yet despite all these financial abberations, economies are slowing down. All these factors still can't spur growth. Investors are squeezing whatever meagre yield they can get from a market that is pretty much tapped out. But I disagree, it ISN'T investor complacency. It's investor stupidity (or investor ignorance, if you wish to be polite).


Why do I say this?


Because of all the financial products which give (almost) zero growth unless you take significant risk, NO-ONE IS REMOTELY INTERESTED IN GOLD AND SILVER!!!!!!


Why?! It'll stop your money being eroded by inflation, you'll own it 100% and can be kept for a long time.


Why are people so ignorant (or scared?) to give this financial product a try? Have these people been away from precious metals for so long, they don't know or understand it anymore? I barely see articles in the MSM about even giving them a try. They would rather push negative interest rates than gold and silver (and, sad to say, that's no exaggeration).

Gold and silver are the "Gary Johnson" of the financial world. They're both the answers to current problems we have, yet are seen as "old-fashioned and irrelevant" and the media won't even take a look at them.


larz's picture

I don't really know these days. I made my living in the markets til maybe 06 but charts are worthless as is trying to understand fundamentals you need a bat phone into the FOMC trading desk to know which CB is buying what and when.   Do you think it was coincidence that Soros brilliantly got out of his large Swiss Franc position right before it went south? master chart reading perhaps? An uncanny grasp of fundamentals?  Nope CBs can print money and buy stuff there is your "market"

adanata's picture


Yeah, well, I believe they're going to re-learn the lesson about what money is; and isn't, the hard way...

larz's picture

I'm sure you are right but when? And how much chaos will ensue? What will the status quo do? Nothing would surprise me