As we kickoff the final day of trading in the first week of November, it can’t be happening again. Is an unsuspecting public about to get torched in the stock market?

November 3 (King World News) – This is yet another example of why Jason Goepfert is the best in the world at what he does — providing crucial, actionable market data.  From Jason Goepfert at SentimenTrader:  Professional money managers keep reducing their exposure to stocks, down drastically in recent weeks. They were holding 90% exposure in September, and have taken that down to 60%. At the same time, individual investors have been becoming ever more optimistic. Currently, the amateurs are more optimistic than the pros, a situation last seen in late 2014…


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Jason Goepfert continues:  A funny thing is happening as stocks rally – professionals are selling while amateurs are buying. That’s not funny “haha” but rather funny in the sense it’s not something we see very often.

The latest results from the survey of active investment managers from the NAAIM organization shows that the average manager is about 60% exposed to the stock market. That’s down from over 90% in late September.

While that survey is just okay as a contrary indicator, it can also be useful when managers diverge from the market. They can be savvy at reducing exposure before trouble and adding it before rallies. A cherry-picked example: In April 2015, these managers were holding above 90% exposure to stocks. As the market chopped around to slightly higher highs, they kept reducing their exposure, and were only 52% exposed before the drop in stocks that August. The only other week in the survey’s history, besides this week, when the S&P 500 was at a high but managers’ exposure was down more than 30% was in April 2007 (see chart below).

Professionals Unloading Stocks To Public

kwn-sentimentrader-iii-1132017

As these managers have pared exposure, individual investors in the AAII survey have steadily increased their optimism (see chart above). It was enough of an increase that this week the AAII Bull Ratio was higher than the NAAIM Exposure Index.

As mentioned earlier, Jason Goepfert is the best in the world at what he does — providing crucial, actionable market data.  The chart and commentary above are from SentimenTrader. To try a free 14-day trial of the internationally acclaimed work that Jason Goepfert produces at SentimenTrader simply CLICK HERE.

***ALSO JUST RELEASED: The Imbalances Are Immense. Plus A Look At Gold And The Mining Shares CLICK HERE.

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