A Little Fear

I’m attaching an updated picture of my Crazy Investor Indicator which shows up until about a week ago, we had maximum optimism.  Rarely does it get to this giddy level.  With the sell off in the last few days, the S&P 500 is now back to where it was in mid April.  A whole month of gain wiped out in just 4 days.  As you can see from figure 1, the fear has picked up some but would have to go up quite a bit before we got to a point of maximum fear.

Crazy Investor Indicator

Fig. 1

For those of you that have been patient with your shorts and not jumping on all the hot stuff, you’re being rewarded.  The internals have been weak for some time and with all the extreme optimism, a sell off was inevitable.  I will caution you today that the volume is extremely low due to the holiday on Monday.  Even so, 86% of all the volume is down volume.  Not many places to hide out today.

This morning I reached my sell threshold on a few more stocks.  This could be a dip on the way up but with all the internals being as negative as they are, I continue to be cautious.  Live to fight another day. 

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May 2008
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