Wednesday, January 29, 2014

Update on Smart Money

Two charts below show the action of Smart Money in the U.S.
The first one shows the general Smart Money index:

                                                                             source: Simple Digressions

The crucial thing is that Smart Money has been selling out the shares since July 2012. This action has been taking place during the quite impressive bull market run. While the majority of the public was very busy in buying into the late stage of the bull, Smart Money was doing the opposite.

Well, but here is the next part of the story:

                                                                             source: Simple Digressions

Big Money is that part of the Smart Money which is active at the last stage of the daily session (to be precise - the last one hour of the session). This group of the players started to sell their holdings in May 2013, nearly a year after the general Smart Money. Big Money participation has added an additional impulse to the selling pressure initiated by the Smart Money in general.

Conclusion: presently Smart Money, together with its Big Money component, is selling the U.S. shares very intensively. While I do not have any slightest idea whether this combination triggers the bear market in stocks one thing is pretty obvious for me - this market seems to be matured for the correction of  at least 20 - 30%.

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