The "Dumb Money" indicator (see figure 1) 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. The "Dumb Money" indicator is now bearish for four weeks in a row.
Figure 1. "Dumb Money"/ weekly
The "Smart Money" indicator is shown in figure 2. This is calculated utilizing data about SP100 options, which is thought to represent large traders. Previously, the "smart money" calculations utilized data from the NYSE; this data is no longer publicly available.
Figure 2. "Smart Money"/ weekly
Figure 3 is a weekly chart of the S&P500 with the InsiderScore "entire market” value in the lower panel. From the InsiderScore weekly report: "Insider sentiment improved to its best level since the week ended March 24, 2009 as, week-over-week, the number of companies with buying increased dramatically and the number of companies with selling decreased solidly.... That sentiment is at its best level since March 2009 is certainly important, but it's also important to note that sentiment is around the same level it was on the downside of a huge buying burst, after the market had rallied 20% off its bottom."
Figure 3. InsiderScore "Entire Market" Value/ weekly
Figure 4 is a weekly chart of the S&P500. The indicator in the lower panel measures all the assets in the Rydex bullish oriented equity funds divided by the sum of assets in the bullish oriented equity funds plus the assets in the bearish oriented equity funds. When the indicator is green, the value is low and there is fear in the market; this is where market bottoms are forged. When the indicator is red, there is complacency in the market. There are too many bulls and this is when market advances stall.
Currently, the value of the indicator is 53.93%. Values less than 50% are associated with market bottoms.
Figure 4. Rydex Total Bull v. Total Bear/ weekly
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