coolhand's Account Talk

[coolhand]

Well, the money managers at NAAIM are getting more cautious. The mean average fell about 7 pts. The mean average was 64.64 last week, and now its sitting at 57.55. I am going to call this modestly bearish to neutral overall. The bears are now fully short, but NOT leveraged. the bulls are still fully long, but for the first time in a long time they are NOT fully leveraged. They are only about half leveraged. Very interesting and perhaps should be reason for concern at this point. Especially since the bulls are showing uncharacteristic caution. Freedom day is next Wednesday and that could bring fireworks. I really don't know what to expect here, but there are reasons to be especially wary right now.

 

[coolhand]

Last week, I said this Wednesday could bring fireworks and boy did it. NAAIM was modestly bearish to neutral last week, and showing signs of caution. This week, the mean average dipped more than 8 pts and that makes it modestly to moderately bearish. These money managers are playing both sides right now as the bears, who were fully short, but not leveraged last week remain fully short this week, but are also now FULLY leveraged. The bulls were fully long last week, but only about half leveraged. This week, they remain fully long, but are back to being FULLY leveraged. This looks like a prescription for volatility.

 

[Whipsaw]

So does that mean they're seeing a bottom in this range?

 

[coolhand]

So does that mean they're seeing a bottom in this range?

Maybe in very short time frames, but I personally don't think we have a long term bottom as yet. They are playing both sides because they know the volatility supports it in short time frames.

 

[coolhand]

This week's NAAIM mean average rose about 7.5 pts. That puts it about where it was 2 weeks ago; modestly bearish to neutral. The biggest change is that the bears, who were fully short and fully leveraged last week, are now flat (in cash or hedged neutral). The bulls remain fully long and fully leveraged. It is interesting the lack of shorting by these money managers in a volatile market. Maybe they sold and took profits during the decline and were largely out of their short positions for the big up-move.

 

[tsptalk]

Thanks! Do you know when this data is collected?... Before yesterday's rally, during, after? The news may have shifted sentiment quite a bit.

 

[coolhand]

The data is collected at the market close on Wednesday and represents a composite of how the money managers were positioned at that time. The weekly number represents a running 2-week average composite.

 

[coolhand]

Houston, we may have a problem. The weekly NAAIM exposure index reading FELL almost 22 pts. This puts the reading well into bearish territory. The bears went from flat last week to fully short and fully leveraged this week. Bullish positions remain fully long and fully leveraged. This is smart money and while they may not always be right in more extreme readings, they do get right at times. I do not know what to expect, but one has to wonder what they are looking at that is causing this shift.

 

[nasa1974]

Houston, we may have a problem. The weekly NAAIM exposure index reading FELL almost 22 pts. This puts the reading well into bearish territory. The bears went from flat last week to fully short and fully leveraged this week. Bullish positions remain fully long and fully leveraged. This is smart money and while they may not always be right in more extreme readings, they do get right at times. I do not know what to expect, but one has to wonder what they are looking at that is causing this shift.

makes you want to go, hhmmmm.

 

[coolhand]

The bearish reading last week got right in a hurry as the first trading day after the reading (Monday) was down hard. But the reversal came immediately on Tuesday and is still carrying forward today. It's quite the short squeeze. A market like this one makes using NAAIM much more challenging as NAAIM works better in a trending market as it's only a weekly reading.

This week, the mean average is up about 5.5 pts and that keeps the reading on the bearish side. The bears went from fully short and fully leveraged last week to fully short and NO leverage this week. The bulls, who were fully long and fully leveraged last week (which is their usual stance) went to fully long with NO leverage this week. So, both bulls and bears are not leveraged. But the reading and the positioning does favor the bears overall. The fact that these money managers are not leveraged on either side of the trade suggests caution on both sides.