ISEE Red Candles

I finally had a chance to update my ISEE Equities chart. And what I see on the horizon has a clear bearish tint to it:

Traditionally an ISEE over 240 or 250 has brought about a downside correction within the span of a week or so. Here are the ISEE Equities readings for the past week:

Now, as you can see we breached the 240 mark on three occasions consecutively starting a week ago. However, in the past few months that hasn’t really led to a significant drop. Thus, what’s a lot more important is the 10-day moving average which I am computing manually in Excel – but it’s worth the effort as this chart provides a more solid insight to the changing tides of retail trader sentiment on a long term basis.

As usual retail traders are the last ones to chase the tape up. And as always I expect the usual outcome – which is for the little guy to wind up holding the bag when things start taking a turn to the downside. Now, that may be this month or perhaps as late as January, unless the Dollar paints a firm bottom risking much coin on downside is a risky endeavor. But take a very serious look at this chart and then tell me that equities have much more upside potential. Maybe on a long term basis – but I don’t want to be a buyer here unless we see a meaningful correction.

Bulltard of the Day: Retail Traders – may their respective deities watch over them.

Cheers,

Mole