The Brains Trust - 2015, page-4

A new year – let’s make it a profitable one.....

I have followed the NAAIM figures for a number of years and is, what I rather cynically call my Genius Index. Each week a number of fund managers report the percentage of their money they have committed to the market. At the October low they had less than 10% invested which indicated that these “smart” people sold stock right into the collapse giving us an important low. They have since followed the market back up and at the close of business this Wednesday just past my Geniuses had 95% of their money back in the market. This is the highest figure since the end of December last year. At that time, the market went sideways for a short time and then went down into the late January, early February low (at which time they were back to only 50% invested). What I find even more interesting is that Wednesday is the day that the Dow fell sharply so if the figures were taken the previous day, they might have even been more heavily invested just as the market looks like it has made a high. So you see why I love this indicator – just do the opposite to this bunch of overpaid geniuses.
Looking at trading for the final day of 2014 we have the RUT forming a Key Reversal Day – the high was higher than the previous day’s high and closed below the low of the previous day. Sometimes they don’t work but should never be ignored. Is this the beginning of the short term correction I was looking for in New York? Looks fairly likely but I must admit that I would like to spend some time this weekend reviewing all my cycles. I am still thinking that the Dow will go much higher in 2015 but as I have mentioned on a number of occasions, I am concerned that the strength of the US dollar is going to suck the air out of other markets around the world.

Iron ore futures had the near months slightly stronger but the more distance months were steady. This suggests that this market needs to do a bit more work around here if it is going to rally further.

Will be a big test of our small resource stocks today. There have been a number of signs recently that many stocks are trying to reverse out of the awful downtrends of recent months. With commodities weaker, how they all behave today should give us some hints on their outlook for 2015.