Potentially Problematic Complacency, Except in Futures…

Like I said last week, the bull side of the boat is presently a standing room only affair, and — contrarianly-speaking — that’s not necessarily a good thing…

We do our own thing on market sentiment, we call it the PWA Fear/Greed Barometer.

Last week it scored a very greedy -80 (-100 is max greed). And the inputs others have noticed as well, and are writing about lately, have only become more extreme over the past week.

In particular, the bullishness among investment advisors (2nd panel) is well beyond the extreme that often precedes a notable pullback in stocks:



Individual investors are feeling all giddy as well…

The American Association of Individual Investors’ (AAII) survey shows quite the spread between bulls (top panel) and bears (middle panel). Bottom panel shows the S&P 500 Index:


In fact 7 of our 10 inputs are screaming greed!


But, here’s the thing, last week’s score was -80. Which is interesting, given that the red-shaded inputs essentially got redder week-over-week.

The factor softening this week’s score comes from the futures space. Amid virtual euphoria among individual investors and advisors, speculators in S&P 500 and Nasdaq futures contracts are saying “hold on.” All told, they’re actually back to net short (anticipating pain) those indices. Hmm…

S&P 500 Net Non-Commercial Futures Traders Positioning:


Nasdaq Net Non-Commercial Futures Traders Positioning:


We’ll see over the next few days/weeks if futures speculators are onto something…
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