Weekly Sentiment Report: SP500 Notches New Highs

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) MarketVane; 3) American Association of Individual Investors; and 4) the put call ratio. The indicator shows that investors are NEUTRAL.

Figure 1. The “Dumb Money”

fig1.6.1.14

Figure 2 is a weekly chart of the SP500 with the InsiderScore “entire market” value in the lower panel. From the InsiderScore weekly report: “Market-wide sentiment continues to be in positive territory as the divergence seen in the market plays out amongst insiders as well. Sentiment within the S&P 500, which hit a new all-time high today, is Neutral; sentiment within the Russell 2000, which is currently -6.5% off its March all-time high, is in Bullish Bias territory. The Financial sector continues to show the most positive sentiment, followed by Consumer Staples and Healthcare; the Telecommunications, Utilities and Industrial Goods industries are showing the most negative sentiment.”

Figure 2. InsiderScore “Entire Market” value/ weekly

fig2.6.1.14

$VIX

Figure 3 is a weekly chart of the SP500 with the $VIX data in the lower panel. The black dots on the $VIX data are key pivot points, which are areas of support and resistance. The $VIX has closed at 11.40, and this is a multi-year low. Resistance is at a $VIX level of 12.22.  Multi-year lows in the $VIX late in bull market cycles tend to be signs of complacency.  Based upon this, we should expect selling in prices in the near future.  See last week’s Weekly Sentiment Report. 

Figure 3. $VIX/ weekly

fig3.6.1.14

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