Sunday, November 21, 2010

Topping Signs Are There

Groundhog day is showing signs of tiring. Quite the reversal today as traders took risk off the table ahead of a very eventful week ahead. Here a few a few things to consider from a directional standpoint:
AAII investor sentiment (WE 10/27) showed the highest % bulls in well over a year at 51.2%, contrasted with the lowest % bears at 21.6%. There are currently 2.73 investors expecting markets to rise over the next 6 months for every investor expecting contraction.  Comparing AAII to SPX shows some very tight correlations with SPX responding about a week after a high is registered.  Contrast that to Investor Intelligence which seems to be far more out of phase from a timing standpoint.  The VIX looks to be bottoming on a daily chart

USD looks to be finally catching a bid. The DXY bounced off support going back to March 08 at 76.144
Insider selling has been extremely high for the past few months now. This past week alone it was nearly 500 to 1. Money also continues to flow out of mutual funds now in an unprecedented 25 weeks straight without a net inflow.
Funds managers have record low cash on hand, another contrarian sign with plenty of history to support it's "signal quality."
In 2007, financials were weak for 5 months prior to the indices beginning their leg down. BAC was a $20 stock in April, today it sits at $11.
Barton Biggs is bullish, and calling for another 10% move higher in risk assets.  need I say more?


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