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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.

Smart Money/Dumb Money Confidence Spread Flashing Stock Market Sell Signals
Smart Money/Dumb Money Confidence Spread Flashing Stock Market Sell Signals

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Brad Lamensdorf

Brad Lamensdorf, the founder and portfolio manager of Active Alts, is a principal and co-manager of the AdvisorShares Ranger Equity Bear ETF. He previously managed a long-short investment partnership from 1998-2005 under the name Tarpon Capital Management. Earlier in his career Mr. Lamensdorf was an equity trader/market strategist for the Bass Brothers’ trading arm. He managed a short only portfolio in addition to co-managing a $1bil hedging program. He also served as in-house market strategist for the entire internal and external network of Bass Brothers money managers.

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