Investor Sentiment: This is For Certain

In a span of 4 weeks, investors (as represented by the "dumb money" indicator) have gone from a state of despair to one of euphoria. In over 20 years of data, this is the shortest time it has ever taken the indicator to go from extremely bearish to extremely bullish. I am not sure what to make of this tidbit of information, but it does point out how silly and fickle investors have become. One minute they are bearish, and the next they are bullish. All this uncertainty what is an investor to do! What is certain is that the "dumb money" is extremely bullish and the "smart money" as represented by corporate insiders is extremely bearish. In general, this is not a good mix for higher prices. The current data is consistent with market tops seen in March, 2010 (4 weeks prior to "flash crash"), February, 2011 (the start of a 6 month top), and March, 2012 (the Q2 top). The lone notable exceptio...