Investor Sentiment Signaling Stock Market on Thin Ice
Investor Sentiment Signaling Stock Market on Thin Ice. The SentimentTrader Smart Money/Dumb Monday Confidence Spread has hit a ten-year low (see chart), signaling a growing gap between how smart and dumb investors view the future of the stock market..
The smart money is becoming increasingly pessimistic about stocks rallying in the weeks and months ahead while the dumb money is becoming increasingly optimistic that they will.. That is a clear warning sign that stock investors should be very cautious. Another sign of caution comes from the equity put/call ratio (detrended), which looks at the ratio’s 10-day average relative to its 26-week average. The ratio is now at its lowest level since January 2018. Stocks tanked and the VIX spike the last time this ratio was this low (see chart)..