A few weeks back I examined the likely reasons that I was wrong about the current rally.
The most important of them was the increase in speculative borrowing by shadow bank financial institutions, who include broker dealers and other financial intermediaries.
This indicator clearly correlates with, and leads, stock price movements.
I have shown this indicator to you a few times over the past month or so, to illustrate what I think is largely driving this rally-an increase in leverage, in essence, a return to hyper bullish market sentiment, typical of a top.
Right now, the indicator is showing a continuation of bullish sentiment, which may be a signal to cautiously buy calls.
So today, I thought I’d take a deeper dive into this one indicator I underestimated, and show you exactly how it’s influencing the markets…
The post React and Reverse: One Indicator Tells Us to Cautiously Buy Calls appeared first on Lee Adler’s Sure Money.
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