NAAIM Reading Now Lower Than Trump Election Reading…

We have kept tabs on the NAAIM Exposure Index (NAAIM) here for several years as an indication of professional money manager sentiment. Survey results were issued last Thursday by NAAIM as they are every week. However we think last week’s results were important for the reasons discussed below.

The end result of low readings during this relentless bull market have been new highs for the major indices as pessimistic or fearful managers were forced to buy equities to cover shorts or add to long exposure from cash (buy the dips).

We last posted the NAAIM chart on 10/20 showing that the survey had reached the lowest reading for the year. But instead of resulting in another buy the dip reversal, the NAAIM reading continued lower last week. In fact, last week’s reading was below the reading when Trump was elected President (red circle).

The red dashed line represents the 50.0% level for NAAIM. Note that the last two time NAAIM dropped below that level (magenat circle), US stock market indices saw steep subsequent declines on the weekly time frame.

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