ISEE Sentiment Index

Today, I want to highlight the recent action of one of our Psychology Composite indicators.  I am really, really surprised at this action of the small public speculator that buys puts and calls on the ISEE.  

The amazing thing - which we intuitively know - is that these public speculators have not really been bullish since early in 2006.  That is exactly our perception of what financial consultants are facing today as they deal with their public investing clients.  We don't think this indicator has changed.  We think it is accurately measuring the sentiment of these historically dumb (and always in the wrong place at extremes) speculators.  The public speculator (and public investor) is so cautious in today's world, even new highs in the market indices are drawing their skepticism.  You can see that in the latest week this index has dropped down into the very bullish category - similar to the market bottoms of 2010, 2011, and 2012.

You can learn more about this indicator by watching a short video here.

This is a big "fly in the ointment" right now, but we do note these speculators are often early, so for now, we still find that a short-term correction is more likely than a continuation of this "all-time" record high upward advance.

Don Hays

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