I have often contended that there are two ways to interpret sentiment data. The first is as a contrarian. Figure out when too many investors are on one side of a trade and bet the other way. This is the "traditional" way most interpret this kind of data. The second method of interpretation is based upon the fact that investor sentiment will track the movements of price. So as prices move higher, we would expect bulls to increase; as prices move lower, we would see investors express their bearishness. It is the rare situation (believe it or not) where investor sentiment and price actually deviate. To read more on variant uses of sentiment click here and here.
A nearly 44% week-over-week increase in the number of buyers market-wide was more illusion than substance as the growth was driven almost solely by insiders at micro-caps. The more than 14% sequential increase in the number of sellers during a shortened week is a more accurate measure of the continued week sentiment that insiders are showing as a group. Insiders in the Technology, Healthcare and Industrial Goods sectors are sending the strongest signals, with a near record number of sellers in the Technology sector, where Semiconductor industry insiders are showing little hesitation when it comes to pulling the trigger. Last week we said that we felt that insiders were sending a signal that they were worried about valuations and this past week's action did little to change our opinion."