8 replies to this topic

[OEXCHAOS]

AAII saw a 4% drop in Bulls in what is a very strong market.

Worse, the Rydex Ratio spiked.

 

It sure looks to me like the least sophisticated investors/traders don't believe this rally.

 

OTOH, ISEE is way up there, which suggests that retail speculators are ST very bulled up.

 

[steadyquest]

If the least sophisticated traders are bearish and retail speculators are bullish, then does it follow that retail speculators are sophisticated traders?

How about institutional investors - which way are they leaning?

If the marlet is this strong with little buy-in, what happens if we see big buy-in?

[steadyquest]

Strange to see a rapidly decaying bear fund toying with an almost 5 year old level.  Just goes to show how unloved the market has been since covid, i.e., relatively low buy-in.

[redfoliage2]

It's interesting to see both smart and dumb money bulled up on this rally ................................

[andr99]

but if it can help and I think it does, all the European tickers I've got on my monitor are screaming loudly ''long''

[OEXCHAOS]

I think timeframe is important here.

Rydex is definitely dumb, but also almost assuredly Swing-to-IT traders. 

ISEE is options traders and not dealers (at least theoretically, any more), so it would seem likely that they're short-term oriented. And, for what it's worth, there was a steep drop in bullishness yesterday.

 

AAII is mostly older, longer-term investors. They actually tend to have a somewhat durable, optimistic bias.

 

Now, the VIX and derivatives, I consider to be "smart money" indicators. The VIX proper is looking a bit mixed on the Swing-IT, and same with the ST. I'm not confident of my read on these because of the sharp and fast shift, which tends to mess with my indicators.

 

My overall takeaway is that it's unduly risky to short this market, and, more to the point, the price action and the overall indicator behavior strongly suggests (to me, at least) that the entire correction was "inorganic", and what we have been seeing is unwinding of news related trading, untethered from market fundamentals*.

 

 

Mark

 

*by "fundamentals", I mean all the things that come together to drive price discovery in the stock market, not necessarily earnings or book values or all the things we have all come to ignore. We use technicals to simply shorthand all those things, rather than try to figure out what all those things may or may not be.

[12SPX]

I agree about shorting the market when its down big but when your up over +4% in a week I think eventually when rationality returns its fine.  For months its been great selling options on both sides and then when we corrected it was easy to sell odte put options first thing in the morning and now its best to wake up and sell odte calls.  I don't mind taking in premium while I build a short here for when reality does hit and don't forget we have that huge gap at 6600 that always eventually gets filled.  Volatility will return, this is just an up week when you sit back and look at it so I'd be taking profits here.  

[linrom1]

This is not retail buying into this rally. Earnings are horrible and sold into. Look into what happened to ASML and TSM. This is not bullish. There is no growth in tech---earnings are flat and declining yet PEs are in a stratosphere. 

[linrom1]

When TSM goes, they'll all go down.