Smart money/ Dumb money divergence

February 26, 20241 Comment

I’m on BNN today at noon. In my opening market comments, I’ll likely bring up the fact that smart money is starting to vacate this market while dumb money is piling in. A quick summary of that thought before I head over to the studio…hope you can tune in!

Dumb money buying

“We have the greatest, most well-proven pump artists in the history of the semiconductor industry moving asset prices by the hundreds of billions of dollars in a week. Pure lunacy. This is the same management team that bought back zero stock in Q1 a year ago with NVDA equity near $200 vs $800 on Friday” Larry McDonald, BearTraps

Larry’s quote shows up in my classic overbought/oversold indicator. That is, when a stock gets too much over or under its 200 day/ 40 week Simple Moving Average (SMA), its likely to reverse direction for at least a few days or weeks. NVDA is 39% > than its 40 week SMA currently. This has proven to be an overbought signal on the chart.

Time for a correction:

Smart Money Selling

Warren Buffett’s Berkshire (BRK.A & B – note that ValueTrend holds this position) has been raising cash. Its now at a record high for the fund ($167BB)!

“There remains only a handful of companies in this country truly capable of moving the needle. Outside the US, there are essentially no candidates that are meaningful options for capital deployment at Berkshire” Warren Buffett

Insiders Selling

Take ‘yer money and run!

  • Jeff Bezos sold $9BB of AMZN last week
  • Jamie Dimon sold $150MM of JPM last week
  • Mark Zuckerberg sold $650MM of META in the past few weeks
  • The Walton Family has been unloading shares of WMT

 

Smart/Dumb Money confidence spread

Smart money is less confident than dumb money about the direction of the SPX. Guess who’s usually right?

One Comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Never miss another blog post!

Get the SmartBounce blog posts delivered directly to your inbox.

Topics

Topics

Recent Posts

When Market Internals Don't Confirm New Record High, Risk of Drawdown Rises (United States: S&P 500)

Divergences

media 3

Place ‘yer bets!

MSFT Price 1990-2015

Tech Stocks – What Happens When the Music Stops?

nat gas long

Here’s a sector that may outperform this summer

naz breadth

Yet Another Warning Sign for the Nasdaq 100

Canada flag in front of a business building | Canadian Businesses

Canadian Businesses

Keith's On Demand Technical Analysis course is now available online

Scroll to Top