Stocks have been rising…and smart money is selling

SentimenTrader/Jason Goepfert

“The idea behind this indicator, popularized by money manager Don Hays and existing with many variations, is that emotional trading takes place at the beginning of the trading day (as traders react to overnight news events and economic releases) while the ‘smart money’ takes the day to evaluate price action and input their orders before the market closes. That concept may seem quaint now in the era of passive funds overwhelming late-day volume, so perhaps this view is no longer accurate. Regardless, it’s unusual to see stocks rally so hard and the SMI sell off so drastically. Using Bloomberg’s version of the index, we can see just how wide this disparity is now.”

USAGOLD note:  Goepfert is still the best in the business at tracking the various indicators of investor interest and sentiment. It looks like smart money has been bailing out steadily since September.

overlay ;ome chart showing the smart money index and S&P500 headed in opposite directionsChart courtesy of • • • Click to enlarge

Repost from 12-10-2020

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