📈 Market Signals

Market internals tell the story.

Market Internals

Let’s walk through some market internals that give us signals about where the market is going.

First is Equity Risk Premium, which tells us how attractive equities are vs. bonds for the risk assumed.

You can see below that we are still under the zero line and have a bear flag forming that looks like it is going to move down further.

Next is Smart Money / Dumb Money Confidence (institutions / retail confidence).

You can see that smart money is continuing higher and dumb money is reversing higher a bit. This is an encouraging sign but it conflicts with the Equity Risk Premium data above.

Now let’s look at NYSE Margin Debt % Growth. This tells us the margin rate of change over a specific period of time. This matters because as margin grows, so does volatility.

The growing margin is a good sign but you can see that we are reaching a critical level. It would be great to get over this level but that still remains to be seen.

These measure are important to watch and will help you identify the direction of the market before others.

I go through this data in more depth and share my outlook on the market here: