Once Again the Smart Money Isn't So Smart

This past week the S&P100 options (i.e., the OEX put call ratio) hit an extreme in that the number of puts exceeded the number of calls by a wide margin.  The OEX put call ratio is thought to represent the large money or smart money, and with puts exceeding calls, this is being interpreted by some as a sell signal.  After all, why would the "smart money" be looking for protection? 

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Morning News Notes: 11.29.10

The morning news notes as prepared by TL...South Korea, Ireland, Germany faces tough choice as Spain wobbles, initial jobless claims from last week, Black Friday, Bush tax cuts, White House deficit reduction commission, inflation in emerging markets, and Fed to become more hawkish in 2011.

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Investor Sentiment: Smells Like A Top

It was only 2 weeks ago that the "dumb money" indicator and Rydex market timers were bullish to an extreme degree and company insiders were selling shares at a clip that had not been seen in 4 years.  In most instances, these are bearish signals.  The exception would be the scenario where too many bulls actually leads to a bull market.  This is what happened in 1995, 1998/ 1999, 2003 and 2009.  Will this scenario be repeated in 2010?  It is seeming less and less likely, and if this is the case, then it is worth repeating what I have stated for 3 weeks in a row: "If the market hasn't topped out already, it should do so within a couple of percent of the recent highs.  Rallies should be sold and stops tightened up.  The market is prone to sudden sell offs.  There will be better risk adjusted opportunities to buy in the future."

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Morning News Notes: 11.22.10

The morning news notes as prepared by TL...10 year Treasury yields, QE2 criticism, WSJ looks at Japan's experience with QE, Gallup's Job Creation Index, and the Irish bailout.

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Investor Sentiment: Happy Thanksgiving

It is hard to envision how any one data point will matter in this holiday shortened week.  Nonetheless, looking beyond next week, I will repeat what I stated last week: "If the market hasn't topped out already, it should do so within a couple of percent of the recent highs.  Rallies should be sold and stops tightened up.  The market is prone to sudden sell offs.  There will be better risk adjusted opportunities to buy in the future."

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Morning News Notes: 11.19.10

The morning news notes as prepared by TL...Ireland, MBA: delinquencies as a % of total loans, escalation of the war in Afghanistan, and Bernanke's speach.

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Market Musings: 11.19.10

We are all familiar with the market adage that "hope is not a strategy".  However, let's acknowledge that it is the expectation that "things" will be better in the future or the hope that today's economic data points will lead to better times are what drives prices higher.  So to invest in the markets you got to have some belief or hope that you have it right.

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