Updating a Few Sentiment Indicators

This week’s edition of NFTRH is more streamlined, having only shown one sentiment indicator (NAAIM) while simply noting that sentiment in general got fixed last week to a short-term degree, while remaining structurally over-bullish. A subscriber emailed this morning asking about the Smart vs. Dumb money indicators, so I thought I’d throw that and a couple others, courtesy of the recommended (I’ve used their premium services since launching NFTRH 12+ years ago) Sentimentrader, up here.

Smart & Dumb money show that smart indicators ‘bought’ the decline and dumb ones sold it. As you can see, the market remains structurally over-bullish by these measures but last week may have been one of those sentiment micro-twitches that sustained and refreshed the rally periodically in 2020.

smart money, dumb money

Indicators at extremes saw the over-optimism addressed pretty soundly and pessimism got up off the floor at least. Both are in line with the ‘micro-twitch’ thesis. It’s not to say it couldn’t develop into something worse, but combined with the market’s intact major trends the picture is bullish until prove otherwise.

sentiment extremes

Here you can see who is looking good from a risk (vs. reward) standpoint and that is the risk ‘off’ vehicles, bonds and gold. No real surprise here either.

market risk

Finally, maybe the best indicator of all cropped up on Friday morning before the markets reversed bullish. It was the tried and true Cramer indicator. When this indicator jumps up and down yelling about things like how investors need to go through “the 5 stages of grief” even before a decent correction has actually gotten going, it’s a contrary indicator to the bulls’ benefit.

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