Two Indicators That Are Not Pointing To A Major Peak

While there are plenty of indicators pointing to some froth in the market, both the NAAIM survey and the Investors Intelligence survey are not at levels consistent with a major peak in the market. At previous peaks the NAAIM survey approached 90% bullishness while it currently sits at 56.33%. Below is a graph of the NAAIM survey. From the NAAIM:



The Investors Intelligence bears generally fall to roughly 20% at major market peaks. The Investors Intelligence bears now sit at 28.7%. At the last two major peaks they got as low as 16%.

There are plenty of imbalances in world economies so its possible that we see a systemic event. Barring a systemic event its unlikely that we are seeing a sentiment induced major top. That does not mean we cannot correct.

8 comments:

Shubh Desai said...

What do u think about RSH? Is it under valued compare to its cash flow and divident?

Anonymous said...

I like that NAAIM chart. I should follow that. Do they announce their numbers weekly? If so, where?

Tsachy Mishal said...

They announce weekly. I provided the link where it says From NAAIM

Tsachy Mishal said...

Like BBY, RSH seems undervalued compared to cash flow. The question is if the cash flow is sustainable given the secular headwinds of competition from online shopping. Too hard for me.

Shubh Desai said...

Amazon doesn't seems to be making money either on line. If on line store save on rent, aren't they have shipping cost? What happens if shipping cost go higher in comming years along with higher fuel price.

Tsachy Mishal said...

Its difficult for me to imagine a scenario where owning a retail store is cheaper than shipping except on heavy or large products. RSH sells expensive little cables. Also, the fact that many things are going wireless is a headwind for RSH. Less cables.

Confessions Of A Bearish Trader said...

[...] bullish. In the past this has meant that the gains have been harder to come by at a minimum. I outlined yesterday why the NAAIM and II survey made me feel better about the market. The Investors Intelligence bears [...]

Short Term Pull, Long Term Push said...

[...] nearly 25% since the October low. This type of advance is usually enough to get everybody bullish. I have spoken recently about the NAAIM survey and the Investors Intelligence survey not showing the type of bullishness [...]