Tuesday, December 14, 2010

Investor Sentiment: Composite Indicator

Figure 1 is a weekly chart of the S&P500, which shows the composite sentiment indicator in the middle panel.   The indicator is constructed from the "Dumb Money", Rydex asset data, and InsiderScore total market value of insider buying and selling.  These are the set of indicators that I highlight in our weekly round up on sentiment. 9 unique data points are utilized in this indicator. 

Figure 1. Composite Sentiment Indicator

As expected, the indicator value is consistent with a bearish signal.  This coupled with other data - like strong trends in gold, crude oil, and Treasury yields - is a strong headwind for equities. 
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