This market won't stop going up until every last penny is sucked out of every potential sideline investor, then Crash II.
Thus, news that investor sentiment is climbing is a signal that we are closer to the end of this dead cat bounce.
The Rasmussen Investor Index, which measures the economic confidence of investors on a daily basis, has jumped to the highest level since the collapse of Lehman Brothers thirteen months ago.
At 95.5, the Investor Index is up nine points from a week ago, up eight points from a month ago and up 32 points from the beginning of the year.
Nationally, 30% of adults say the U.S. economy is getting better these days, while 47% believe it is getting worse. Twenty-two percent (22%) of Republicans feel the economy is on the rise, but 61% disagree. Meanwhile, 41% of Democrats feel the economy is improving, 33% say the opposite.
Investors are evenly divided: 40% say the U.S. economy is getting better these days, while 41% say it is getting is worse.
The Rasmussen Investor Index id derived from nightly telephone surveys of 500 adults and reported on a three-day rolling average basis. The baseline for the Index was established at 100.0 in October 2001.
The Index reached its highest level ever at 150.9 on January 7, 2004. The lowest level ever measured was 52.5 on March 9, 2009.
Robert, as you recently reminded your readers, "there are no constants" in the economy, so this index is of little predictive use. It currently equals 95.5 and has been as high as 150.9 so we may have a long way to go before the market turns.
ReplyDeleteInvestor Intelligence also publishes a sentiment index, although theirs is of investment advisors. The uptrend sentiment reached a high this year in each month after MArch as the market moved up. It hit a high of 47.7% in early June, 2009, and for the first time since March the market declined by about 8%. Then resumed ite uptrend. The index reached another high in late August, 2009 of 51.6% and after a 2% - 3% dip the market continued up. The index's highest level in 5 years was 62.9%, so once again we may have a long way to go before the market turns down. Or not, there's no way to predict.
Based on the current "bloodless verdict of the market", the trend remains up.
I am just looking at the trend rather than its all time high. The high of 150.9 has no interest for me. It occured in a different period.
ReplyDeleteWhat I am looking at is that investor sentiment continues to climb, and the faster the morelikely we are near the end of the run. I wouyld call these sentiment indicators more support indicators than primary indicators. Money suppply is a primary indicator. Overhead supply is a primary indicator.