Short-term Outlook:  Neutral  From Feb 26, 1107 SPX

Equity Indicators - Updates and Extremes

Insider Buy/Sell Ratio In The Nasdaq 100

The latest data out of the InsiderScore.com service shows that corporate insiders increased their selling pressure (relative to buying) yet again this week.

Their overall score moved to the most extreme level since mid-September last year and is in the bottom 3% of all readings of the past six years.

More interesting, however, was their reading for the Nasdaq 100 in particular.  For that index, their Buy/Sell Ratio moved to its second-most extreme level since they began tallying it in 2003.

After the highest selling extreme in mid-November last year, the NDX chopped modestly lower for a couple of weeks, then spurted higher in late December before rolling over again.  The other big spike was in mid-November 2005, which preceded a more severe and protracted pullback in the tech index.

This indicator isn't infallible, nothing is, but it's good enough that I'm leery of looking for techs to have enough upside momentum to drag the broader market up along with it.  This is bearish on a short- to intermediate-term time frame.

AAII Bearish Percentage

The most recent survey from the American Association Of Individual Investors (AAII) showed a continued preference for "no opinion".

Last week, we looked at how the individual investors in the survey had moved to their highest Neutral level in four years.  That increased this week, as 38% of investors now don't have any opinion on stocks over the next six months (up from 35% last week).

The increase in Neutral responses came mostly at the expense of the bearish camp.  Those expecting an outright market decline dropped to 26% this week from 30% last week, marking one of the lowest levels of pessimism in the past few years.

As we can see from the chart, the other few times weren't that great a time to be invested in stocks, but I'm not as concerned about this reading since the level of outright bulls is still quite low.

So while we're not seeing a lot of bears (which is troubling), we're not seeing the kind of untamed optimism that is a more consistent predictor of intermediate-term market peaks.  Mark this one as an eyebrow-raiser, but not an actionable short signal.

Assets In The Rydex Large-Cap, Mid-Cap and Small-Cap Value Funds

One of the more curious developments in the Rydex family of mutual funds lately has been the preference for these traders to focus on Value funds across all different market capitalizations.

Over the past few days, we've seen a spike in interest in Large-Cap and Small-Cap Value, which has pushed the amount of assets in the Value funds to more than $500 million.  That's a new record since the inception of the funds in 2004.

Also notable is that there are about six times the amount of assets in the Value funds versus the Growth funds.

There have been three other distinct times we've seen the ratio spike above this level.  Those were in mid-July 2006, early March 2007 and late August 2009.  After each occurrence, the ratio of Value stocks versus Growth stocks declined during the next few months.

Value has already been taking a back seat to growth, and if the pattern holds then that should continue.  Typically, if Growth out-performs, then that means investors are in risk-seeking mode, and stocks in general tend to rise.  So this would be a modestly positive intermediate-term signal for the broader equity market, though I don't have a lot of confidence in it as a predictor of general stock market strength or weakness.