Coolhand's Market Analysis

The two groups that I track are not on the same page going into the new trading week. The Top 50 is moving in one direction and the Total Tracker is moving in the other. Given the statement made last week by Mr. Market, I find that a bit curious. Here's the charts:




The Top 50 jumped their collective stock exposure by 24.10%, from a total stock allocation of 33.86% to 57.96%. This group has not been a good predictor of weekly price movement all year, although they were correct last week when they increased their stock exposure by 6.8% and the S fund rewarded that token bullishness with a gain of 3.41%.

I certainly understand the increase in stock allocations though, as many technical indicators turned back up last week.




Here's where things get interesting. In spite of very bullish action last week, the herd (Total Tracker) decreased their stock exposure by 3.18%, from a total stock allocation of 38.8% to 35.61%.

Is it because they just don't trust this market? Is it because the weekly stock allocation of the Top 50 has been largely a contrarian indicator this year?

Our sentiment survey for the new trading week remains on a buy with an even split of 45% between the bulls and bears.
I think we may see some weakness this week given the bullish jump by the Top 50 but I doubt this market gets much going to the downside. I also think if weakness comes it will be earlier in the week to shake off the newly minted bulls. A total stock allocation of just 35.61% across the entire tracker is still quite bullish longer term.