Market Report: Smart Money Is Selling At The Fastest Pace Since 2007

It’s important to note that this also happened during the first year of the 2003-2007 (September 2003) and 2009-2020 (September 2009) bull markets. In those 2 historical cases, the stock market rallied another 4-6 months before major corrections began. This is a bearish sign for spring & summer 2021.

Gamma Exposure

And finally, Gamma Exposure recently hit a record high. High values are bearish and low values are bullish. It’s better to look at Gamma Exposure as a ratio vs. the S&P 500’s value:

This is a bearish reading. When this happened in the past, the S&P fell -7.3%, -7.9%, and -31% over the next 2 months from where the S&P was as of that date:

Conclusion

  1. Long term investors should be highly defensive right now. This speculative bull market may last another 6 months or even 9 months, but in 2 years time, long term investors will be glad they did not buy today.
  2. Medium term traders should go neither long nor short.
  3. Short term trend followers should continue to ride the bull trend because no one knows exactly when it will end.
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