Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

Friday, February 1, 2013

The Retail Investor Indicator

Stock Market Technical Analysis Blog

Click on image to enlarge

In the market today we had a classic, summer style low volume Friday short squeeze to counteract some deterioration in the past few days in the indexes.  There have been lots of comments about how the retail investor has been pouring money into stock funds the past three weeks.  Historically this is a bearish indicator.  Looking at chart 3 above, in 2008 as the market was heading down to the 800 level retail investors were selling out of stocks in waves right before we hit the 800 level and now four years later they are buying into stocks huge as the S&P approaches the 1550 level, to put it simply most retail investors buy near the top and sell near the bottom and it's always been that way.  Something to think about...