“Smart Money” And Shorts Are Skeptical On Monday Rally

The Smart Money Flow Index shows that professional money managers remain skeptical of the rally. The index is near a two-year low and advanced only 1.2% on Monday, a day that saw the Dow Jones Industrial Average move up 2.8%. (The Smart Money Flow Index tracks moves on the Dow Jones Industrial Average during the first and last 30 minutes of trading on the theory that professional money managers dominate trading in those periods as they try to get ahead of trends for the day or to use the momentum built up by trades as the market moves into a close.)

The other index to watch–and on Wall Street there’s an index for everything–is a Goldman Sachs basket the tracks the 50 stocks with the highest short interest in the Russell 3000 Index. The Russell 30000 was up 2.6% on Monday–a big enough move that it might have triggered panic buying by traders looking to close out short positions before they took more damage. But those 50 most shorted stocks moved up only 1.7%. Shorts clearly didn’t feel in a rush to cover their bets.

Today as of 2 p.m. New York time, the Dow Jones Industrial Average is up 0.2%. The Standard & Poor’s 500 Index is off 0.15%. And the NASDAQ Composite is down 0.97%. The differences in the index are largely explained by a huge 5.5% gain in General Electric (GE) on a rumor that Warren Buffett was buying shares. (The GE move helped other industrials in the index.) On the NASDAQ side, a big drop in Nvidia (NVDA) on news that it was suspending tests of self-driving vehicles in the aftermath of a the death of a pedestrian in Arizona after a collision with a self-driving Uber has led tech stocks lower. Nvidia shares are off 4.8%.

The yield on the 10-year U.S. Treasury has dropped 6 basis points to 2.80%. Gold is off 0.86% to $1349.20 an ounce.