The smart, and dumb money are
bullish. What does this mean?
Both the smart money and the dumb money are are getting more bullish according to several indicators. What does this mean? We usually like to do what the smart money is doing, and go against the dumb money. So what can we read from this?
AAII Investor Sentiment Survey, "dumb money" - 48% bullish, 19% bearish.
Wall Street Sentiment Survey, "smart money" - 50% bullish, 35% bearish.
On Sentimentrader.com, they use a Buy / Sell Confidence Indicator which takes into account, a multitude of other sentiment indicators.
Buy Signals: Buy confidence is at 60% or above, sell confidence is at 40% or below.
Sell Signals: Buy confidence is at 40% or below, sell confidence is at 60% or above.
The Buy Confidence (smart money) is currently 63%.
The Sell Confidence (dumb money) is currently 61%.
One note:
The Buy Confidence was as high as 77% last month and is down to 63%.
The Sell Confidence was as low as 38% last month and is up to 61%.
I hope that makes some sense. Basically the smart money was very bullish the last couple of months and, while they are still bullish, they are less bullish than they were. The dumb money was very bearish a couple of months ago (at the lows made in April) and have now become very bullish. Too much so.
Any time both Confidence indexes were above 60%, 30 days later the S&P 500 had an average return of -1.9%, with a whopping 93% of the days showing a negative return. There are four distinct time periods included in those occurrences: early November 2002, mid-June 2003, February 2004 and late June 2004 - generally they coincided with corrections within a bull market, about what we would expect.
The S&P 500, which began the year at 1211.92, went positive for the year on Friday closing at 1216.96. More often than not, when an extended down period for the market turns positive for the year, the market turns back down immediately . But when it doesn't, the returns were quite good going out a month. It's interesting in that the pullbacks were either pretty steep when this happens, or the gains were very high. Not much in between. Today (Monday) could be the tell. If it ends positively it could be a good sign for the market for the next month. A negative close would be a bad sign.
Want more trouble? Oil hit $59....
Chart provided courtesy of www.decisionpoint.com
We will conclude our sentiment survey tonight (Monday). If you haven't already, please sign up to get in on it. See the "Administrative Note" below.
That's all for today. Currently 100% G fund. Until next time...
Administrative Note: I have started the TSP Talk Weekly Sentiment Survey which will be a poll sent via email each Friday asking you one question; Are you bullish, bearish or neutral for the market in the coming week? If you want to be a part of this, click here ... Join the Weekly Sentiment Survey and input your email address. When the confirmation page comes up, there will be two boxes on the left side. One to join the Weekly Survey, and one to join the email alert list. Choose the box of the list you wish to be added to. If you are already on the email alert list, or you would like to be, you will need to check both the Email Alert and the Weekly Sentiment Survey box. Thanks!
Both the smart money and the dumb money are are getting more bullish according to several indicators. What does this mean? We usually like to do what the smart money is doing, and go against the dumb money. So what can we read from this?
AAII Investor Sentiment Survey, "dumb money" - 48% bullish, 19% bearish.
Wall Street Sentiment Survey, "smart money" - 50% bullish, 35% bearish.
On Sentimentrader.com, they use a Buy / Sell Confidence Indicator which takes into account, a multitude of other sentiment indicators.
Buy Signals: Buy confidence is at 60% or above, sell confidence is at 40% or below.
Sell Signals: Buy confidence is at 40% or below, sell confidence is at 60% or above.
The Buy Confidence (smart money) is currently 63%.
The Sell Confidence (dumb money) is currently 61%.
One note:
The Buy Confidence was as high as 77% last month and is down to 63%.
The Sell Confidence was as low as 38% last month and is up to 61%.
I hope that makes some sense. Basically the smart money was very bullish the last couple of months and, while they are still bullish, they are less bullish than they were. The dumb money was very bearish a couple of months ago (at the lows made in April) and have now become very bullish. Too much so.
Any time both Confidence indexes were above 60%, 30 days later the S&P 500 had an average return of -1.9%, with a whopping 93% of the days showing a negative return. There are four distinct time periods included in those occurrences: early November 2002, mid-June 2003, February 2004 and late June 2004 - generally they coincided with corrections within a bull market, about what we would expect.
The S&P 500, which began the year at 1211.92, went positive for the year on Friday closing at 1216.96. More often than not, when an extended down period for the market turns positive for the year, the market turns back down immediately . But when it doesn't, the returns were quite good going out a month. It's interesting in that the pullbacks were either pretty steep when this happens, or the gains were very high. Not much in between. Today (Monday) could be the tell. If it ends positively it could be a good sign for the market for the next month. A negative close would be a bad sign.
Want more trouble? Oil hit $59....
Chart provided courtesy of www.decisionpoint.com
We will conclude our sentiment survey tonight (Monday). If you haven't already, please sign up to get in on it. See the "Administrative Note" below.
That's all for today. Currently 100% G fund. Until next time...
Administrative Note: I have started the TSP Talk Weekly Sentiment Survey which will be a poll sent via email each Friday asking you one question; Are you bullish, bearish or neutral for the market in the coming week? If you want to be a part of this, click here ... Join the Weekly Sentiment Survey and input your email address. When the confirmation page comes up, there will be two boxes on the left side. One to join the Weekly Survey, and one to join the email alert list. Choose the box of the list you wish to be added to. If you are already on the email alert list, or you would like to be, you will need to check both the Email Alert and the Weekly Sentiment Survey box. Thanks!
Have questions? Visit our message board for answers.
Would you like to be on our
email alert
list?
We will send you an email when there is a change to our asset allocation
or market outlook. Input your email address in the form on the top
right of any page and you're in. Your email address will never be
given out.
Read our
privacy policy.
By signing up you agree to the TSP Talk
Terms of
Service. More details below **.
Like
what you're reading? Tell
a Friend
about us.