Investor sentiment remains little changed after a two week "melt up".
The "Dumb Money" indicator is shown in figure 1. The "Dumb Money" indicator
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.
Figure 1. "Dumb Money" Indicator/ weekly
As investors are not buying into the rally, one might conclude that the rally
will march onward and upward until they do, and then it will rollover. That
seems likely. However, it is hard to imagine that prices will continue making
gains at the pace seen over the past two weeks. I still stand by the
sell signal and expected spike in prices that I wrote about two
weeks ago. The recent "breakout" in prices will eventually be seen as a
better time to sell rather then a new launching pad for a bull market. That's
how I see it for now.
The "Smart Money" indicator is shown in figure 2. The "smart money" indicator
is a composite of the following data: 1) public to specialist short ratio;
2) specialist short to total short ratio; 3) SP100 option traders. The "smart
money" is neutral.
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