Investor Sentiment: Neutral

Investor sentiment is neutral.  As expected, bullish enthusiasm has been on the wane as prices have pulled back over the past 2 weeks.   The bulls hope that this is the pause that refreshes, and the bears (if there are any out there) hope that the highs have been seen.  From a sentiment perspective there is little edge to the data.  Such short term pullbacks may bring in buyers, but this is not the set up that would lead to sustainable or accelerated gains.  

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) Investors Intelligence; 2) Market Vane; 3) American Association of Individual Investors; and 4) the put call ratio.   This indicator is neutral. 

Figure 1. "Dumb Money"/ weekly

  

Figure 2 is a weekly chart of the SP500 with the InsiderScore "entire market” value in the lower panel.  From the InsiderScore weekly report we summarize: "SP500: Strong Sell Bias" and "Russell 2000: Sell Bias".

Figure 2. InsiderScore "Entire Market" Value/ weekly 

Figure 3 is a weekly chart of the SP500. 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 68.91%.  Values less than 50% are associated with market bottoms.  Values greater than 58% are associated with market tops.

Figure 3. Rydex Total Bull v. Total Bear/ weekly

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