Follow the money, not the squawk.
As traders we vote with our wallets not our mouths.
The whole concept of the Investor’s Intelligence Survey seems flawed right out of the gate.
Joking – sort of.
Guy Lerner, over at the Technical Take (see Here) has some excellent data backing up this perspective. Specifically, he looks at the Rydex fund flows to assess how investors and traders are actually postured in the market. Here is one metric – post close Friday – indicating that investors are far from ambivalent with their allocations on the long side of the market.
“(This) 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 70.64%. Values less than 50% are associated with market bottoms. Values greater than 58% are associated with market tops.”
For more information, Guy’s site is found @ www.thetechnicaltakedotcom.blogspot.com
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