The NAAIM Investment Manager Exposure number had a very interesting read this week.  The data showed that even the most bearish manager was 90% long.  It was such an absurd number we have to add some color to it.

The NAAIM website has free data back to 2006.  It turns out that # was the most invested negative response we’ve seen since then.

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It also turns out that many of these other higher numbers are clustered together.

In late 2006/early 2007 three signals clustered together in 4 weeks and led to only a rangebound market.  Another signal came when the market had a solid 7% pullback before a move to new highs.

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In 2013 we saw 1 reading pop up in January.  It was early in a market breakout phase so it’s not as relevant here.  Moving to late ’13/early ’14 signals piled in.  The market just struggled to gain ground in that time but eventually people were shook out and the S&P 500 moved higher.

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Before last week’s data, we’d seen 2 signals in this bull market.  Both times the market struggled to move higher for some time.

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I tend to give more weight to data points that tell us what investors are doing and not what people say they are doing, but the other NAAIM weeks with highly invested bears tells us what we’d expect.  For the most part upside in the indices has been limited in the near term after these signals.

We’ll see how it plays out this time.

Trade ’em Well