Weekend Update

Last week I was intrigued by what the total tracker charts were suggesting, which was an increasingly conservative allocation in the face of buying pressure. This week there's been a bit of change. Let's take a look:




The Top 50 are still showing a conservative allocation overall, but nothing dramatic since last Monday.




The Total Tracker is showing some buying interest going into the first week of August. But the total cash/stock allocation is still conservative overall and could still be viewed as bullish from a contrarian perspective.




The Top 15 are pretty much where they were last Monday.

So the charts still look bullish to me given the high cash levels. If the Total Tracker cash allocation drops by 10% I'd start to take notice, but for now it suggests higher prices ahead (coupled with a Seven Sentinels buy signal).

 

[malyla]

Coolhand,

Thanks for your always welcome update. You say the charts are bullish. If you were to lable the top 50 as Smart money (their allocation into stocks follows a rise in the stock market and allocation into cash follows the beginning of a correction) and the Overall as dumb money as they show the exact opposite and wrong response to the stock market, then the charts are bearish. I would wait until the top 50 cross the plus 50% into stocks before I would follow the smart money (assuming I can get myself off the position B&H toadstool to make a trade in a market I have no faith in right now). Just a thought on how to follow this signal. Thanks again. This is good stuff.

Maybe if you could lable when the SS signal occurred on these charts we could see when the "smart" money makes a move. Another thought...I have lots of thoughts today

 

[Boghie]

Malyla,

I look at 'Dumb Money' in the mirror every day

This year I have done better picking tasty beers than getting a read on the market.

I think CH is using the Top 15 (a group of folks who have shown strength in both the up and down markets of the past years on the tracker) as smart money. I am starting to wonder if a few of those folks are nearing retirement - maybe allocating for safety. That would cause problems for that list. Don't know. I do know that this years market chop is nothing I want to trade into. I tried and I lost. But, I don't want to be out of the market either. Oh well:blink:

 

[coolhand]

I think the Top 15 are a reflection of what our TSP restrictions have done to us, coupled with the volatile nature of this market. It's not a "trending" market we're dealing with, it's a market of fast money fighting it out with each other as many "main street" folks are long gone.

Malyla,

I look at 'Dumb Money' in the mirror every day

This year I have done better picking tasty beers than getting a read on the market.

I think CH is using the Top 15 (a group of folks who have shown strength in both the up and down markets of the past years on the tracker) as smart money. I am starting to wonder if a few of those folks are nearing retirement - maybe allocating for safety. That would cause problems for that list. Don't know. I do know that this years market chop is nothing I want to trade into. I tried and I lost. But, I don't want to be out of the market either. Oh well:blink:

 

[coolhand]

Coolhand,

Thanks for your always welcome update. You say the charts are bullish. If you were to lable the top 50 as Smart money (their allocation into stocks follows a rise in the stock market and allocation into cash follows the beginning of a correction) and the Overall as dumb money as they show the exact opposite and wrong response to the stock market, then the charts are bearish. I would wait until the top 50 cross the plus 50% into stocks before I would follow the smart money (assuming I can get myself off the position B&H toadstool to make a trade in a market I have no faith in right now). Just a thought on how to follow this signal. Thanks again. This is good stuff.

Maybe if you could lable when the SS signal occurred on these charts we could see when the "smart" money makes a move. Another thought...I have lots of thoughts today

In order to be smart money I would think one has to have much more flexibility with moving in and out of the market than we have. The Top 50 generally changes each year. Some of last year's best performers are now way down on the list this year.

The same holds true for the pros.

The point is no group of people can consistently outperform the market day after day. Everyone is going to have their good days and their bad days. If the good days outnumber the bad days then perhaps they can outperform the market by some measure.

There is some element of luck involved too.

I think the total tracker is a better barometer of sentiment than either the Top 15 or the Top 50. At least that's my point of view.

What happens to the Top 50 is this, when the market goes into rally mode, many folks down the list rise if they are in stocks and replace some number of Top 50 folks. The opposite holds true for a decline. The list of names changes to some extent. If one has had a great year and is in the Top 12 or so, they are more apt to hold their Top 50 status because they've built a large lead.

We have to remember too that with only 2 IFTs we are all forced to hold positions we may not be happy with. As for myself, I would have taken 40 or 50% off the table early last week if I had the flexibility to do so, but I didn't. So I stayed completely invested because I was afraid I would be in cash when the market turned yet again. I also read comments by folks on the daily IFT list that reveals frustration when they can't act on their wishes.

I don't think I could use these tracker charts by themselves as a reliable indicator. I need to use them with some measure of technical analysis (Seven Sentinels) in order to add context to my market expectations.

As for the tracker itself, I get more out of the Total Tracker chart then the other two. I may drop the Top 15 after this year and look for something else to replace it.

Any suggestions?

 

[malyla]

Thanks Coolhand,

I didn't realize that the players were changing for each plot making this more of a rearview mirror indicator. I still find it interesting that the Top 15 are taking positions that are contrary to what the market movement indicates for making money which would quickly kick them out of the top 15 list.

On the Total Tracker, has the cash position ever been greater than the stock position? Or are most TSP participants equities B&H'er?

Interesting indicators. There has to be a way to use this to time or position yourself in the market, but with the tracker changing day-to-day it is best as a weekly sentiment survey double check.
Thanks again

 

[coolhand]

I only began tracking the Total Tracker a few months ago so I don't have much data to tap in to. So far cash levels have been bouncing between 35 and 40% or so. Bonds are over 10% allocated now so you may or may not want to include them in the mix. As a daily tool, this data is very limited, but as a trend indicator it has more value. I'm trying to use it as a sentiment indicator.

Thanks Coolhand,

I didn't realize that the players were changing for each plot making this more of a rearview mirror indicator. I still find it interesting that the Top 15 are taking positions that are contrary to what the market movement indicates for making money which would quickly kick them out of the top 15 list.

On the Total Tracker, has the cash position ever been greater than the stock position? Or are most TSP participants equities B&H'er?

Interesting indicators. There has to be a way to use this to time or position yourself in the market, but with the tracker changing day-to-day it is best as a weekly sentiment survey double check.
Thanks again

 

[FireWeatherMet]

Ahhh,

Always nice to be pre-positioned in stocks (25% C, 25% S, 50% I) on the 1st day of the month during a morning like this.

Thanks for keeping me on the "Bull".