The "Dumb Money" indicator is shown in figure 1, and it is in the neutral zone. The "dumb money" 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.
Figure 1. "Dumb Money"/ weekly
If the "Dumb Money" indicator remains neutral for 4 - 5 weeks while prices remain under their 40 week moving average, then there is a high likelihood that the market will rollover. I discussed these observations in the article, "Investor Sentiment: Some Context". Whether we roll over or push higher by the end of April is difficult to tell from this point, but I think it is very likely that lower prices should bring out the dip buyers and those still on the sidelines looking to get long because they missed their opportunity three weeks ago. In several weeks time, we will either be "selling strength" (i.e., hope) or riding the crest of a very bullish wave.
For completeness sake, I have included the "Smart Money" indicator 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.
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