Active Managers near most bullish levels ever, what’s next?

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With many of the major stock indices hitting all-time highs, would it be a surprise to see money managers excited about the markets?  If they would happen to be excited, could that be a bearish signal for the markets?

The upper left table reflects that the National Association of Active Investment Managers just hit the 6th most exposed to equities level, since data started back to 2006. The lower right chart plots the NAAIM on top of the SPX since 2011.

The table below plots the times that the NAAIM came in with a reading over 90, since 2007, overlay-ed on top of the S&P 500.

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The table look looks at S&P 500 performance after the NAAIM exposure was greater than 99

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Summary – Active managers are near the most bullish they have ever been and in my humble opinion, this is something to respect.  Historically, this survey alone isn’t a major contrarian warning. I remain focused on messages from our Shoe Box indicator, high yield funds, Advance/Decline ratio and the Discretionary/Staples ratio.

 

 

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All-Time monthly highs and favorite sectors

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Above are markets that are starting this month at all-time highs. Only the Nikkei is not at an all-time high, it did finish last month at a new monthly high, surpassing the highs hit in 2007. Historically, having numerous markets closing at all-time monthly highs at the same time, has been a positive for the markets.

Below are the 9 S&P 500 sectors with Power of the Pattern signals/thoughts applied to each.

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Most of these are doing very well. The green check marks are the favored Power of the Pattern sectors to own, as each are breaking above old highs, inside of quality rising channels.

Each Thursday I share these with Sector/Commodity Sentiment and Premium Members.

If you like trend following or are interested in potential turning points in the sectors complex, I would be humbled to have you as a member and to shared these each week with you.

 

 

See details on Sector Extremes and Premium Membership below

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Gold- Important break through is about to happen!

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In the last 15 years gold is up 4X over its 2001 lows of $250 per ounce, however the last 3 years have been rough with it losing over a third of its value. Many continue to debate if Gold is in bull or bear market. Personally I am not big on labels, I care much more for being on the right side of a price trend.

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The above chart reflects that gold looks to be in pennant pattern (Lower highs & Higher lows) that is about to end pretty soon.

According to Forxetribe here are some statistics about the pennant pattern:

– In 75% of cases, the exit is made in the side of the previous trend
– In 90% of cases, this is a continuation pattern
– In 55% of cases, the target of the pattern is reached
– In 16% of cases, a pullback occur

So in 75% of the cases, the exit is made in the side of the previous trend.  In your opinion, is the previous trend up or down? This question most likely could stir a heated debate on which trend Gold is in.

Full Disclosure – At this time Premium and Metals members own GDXJ due to a bullish falling wedge taking shape over the past few weeks and a breakout above the wedge being attempted. We have a game plan in place for the completion of this pennant pattern.

Bottom line to this pattern….Pennants are NOT very good at suggesting which direction a break through will take place. They are prety good at suggesting a big move will take place on the break through of support/resistance. It usually pays to follow the break through and members will!

 

If you would like to have daily or weekly Power of the Pattern ideas sent to your inbox, I would be honored to have you as a member

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