Saturday, August 22, 2009

Investor Sentiment: I Have Said It All!

Ok, I have said enough. I have said it all. There is nothing else to say. To spare you the trouble of having to waste your time reading and to spare me the embarrassment, there will be no comments this week. Just graphs. As expected, the sentiment picture has changed little from last week. Go bulls!!!

Figure 1. "Dumb Money" Indicator/ weekly

Figure 2. "Smart Money" Indicator/ weekly

Figure 3. Rydex Bullish and Leveraged v. Rydex Bearish and Leveraged/ daily

Figure 4. Insider Score/ Entire Market Insider Buying and Selling


Anonymous said...

Maybe the Dumb Money is not so dumb after-all?

Anonymous said...

"Market could be longer irrational, than you solvent" or something in this style, as Keynes said :-)

Similar thing you can see in 2003 - extremely high bulish sentiment (for example AAII SR) didn't provoke market to deep correction at all.

@ Anonymous no 1 - Dumb Money are really dumb, but the common true says: nothing guarantees you 100% effectiveness. Sometimes Dumbs can be right :-) but I prefer to look at what smart money do - they are right much more often. It's all the metter of Probability.

Dacian said...


The question is: Did you profit from "lower prices" the market offered you last week (the 2% down) to go long? :)

Overall, the market is becoming silly imho (but who am I anyway?)

And btw, thanks for the charts!

PS: let's see if the $ accelerates down from here

Guy M. Lerner said...

Anonymous #2:

Thanks for using the word "probability".

Dacian: The answer is "no"; I was not in the market. Although at this point, the position would represent a small portion of a portfolio as we move higher I would be less inclined to risk more; furthermore, I don't want to day trade or have to thread the needle to make a trade work, and with only a 2% pullback that is what I think we would be doing. To me, there is high probability that we will pass this way again and again!

Anonymous said...

There was quant easing (Fed buying assets) in 2003-2005.

Anonymous said...

"The question is: Did you profit from "lower prices" the market offered you last week (the 2% down) to go long? :)"

That decline shouldn't have taken you of your positions if you had entered the rally in July. The trend hadn't been affected.

Goatmug said...

I appreciate your blog so much! I've found you after hearing your interview with Daniel Frischberg in Houston on BizRadio. You were great.

What type of inputs do you use to create your "Smart Money" indicator?


Anonymous said...

In June I gave up the 'hope' of a correction downwards in stock prices. Then the small correction came in early July. I have been selling my stocks in the past 3 days, and have now 42 % in cash, just in case we get a September 'correction'.

I am now pretty sure that the worldwide recession is behind us, and the S&P 500 will rise to its 'normal' levels of 1200 points within a couple of years. But the road will be bumpy.