Smart Money/Dumb Money Confidence Spread Flashing Stock Market Sell Signals
Smart Money/Dumb Money Confidence Spread Flashing Stock Market Sell Signals. SentimenTrader measures sentiment of so-called “smart and dumb” investors by a complex formula that differentiates the smart from the dumb by how they normally trade. As you can see from the chart below there is a widening spread between recent optimism of dumb investors and pessimism of smart investors. That widening sentiment gap puts the spread in negative territory. And that historically is a sell signal. This indicator is among a number of reliable sentiment gauges and other indicators we’ve talked about recently that also are flashing sell signals. So be careful.