Social Intelligence Investor #41: Doubt Grows, Attention Came & Left, Inflation Hot

Social Intelligence, in the fast-evolving field of behavioural finance, is used by professionals in trading & investing systems to decode the crowd’s behaviour and predict market shifts.

These are unprecedented times in the markets and the economy, which are both giving mixed forecasting signals.

In the markets, professionals are extremely bullish, but retail investors have significantly low attention, with platforms like Robinhood reporting a 30% drop in activity. Retail attention is focused on job and inflation concerns; some are saving while others are forced to dip into them to pay for day-to-day living. Without the usual exit liquidity from retail attention, prices could stay elevated, but if markets were to get spooked and dump, the move could be catastrophically fast with thin retail liquidity.

Meanwhile, the economy continues to print data showing growth in services and manufacturing, with a positive outlook, but global 10Y and 30Y bond yields are trending higher into very dangerous levels as US inflation comes in hot. Businesses predict growth, but consumers are at another all-time low in confidence as jobs continue to be cut, and energy and food inflation soars. US household debt is at record highs, with credit cards, car loans and student loans at high delinquency levels.

Bitcoin sentiment is headed back towards fear with the move lower, but nothing much has changed since last week. This is exactly what we want to see for the continuation of the rally and confidence that the bottom is in.

Stocks’ extreme greed is still elusive as the dial turns down slightly, remaining in greed for a month now, contrary to the last 19months ’ behaviour, where stocks reached greed and rapidly retraced. If this is what people are expecting, then it’s likely it will no longer repeat.

Rational retail sentiment volatility is tightening

Neutral investors are beginning to choose sides, and the majority have decided to lean bearish; bears increased by 3.6%; bulls 1%. This is negativity bias in action, as nothing has really changed- Ceteris paribus, humans prefer fear to greed.

Bull markets are built on this doubt, not certainty

Inflation returns hotter than expected in the United States as CPI leaps to 3.8% and PPI, the FED’s preffered measure, soars even higher to 5.8%. This is driven largely by energy, a small bump in services and minor inflation in food; it’s called sticky inflation for a reason. Geopolitical factors are in control. How does the effect the upcoming rate changes?

The US has a 98.6% of holding steady, 1.4% chance of a cut and no chance of an increase. ECB rates have dropped to a 17% chance of being cut, 83% chance of being held steady. Interesting stance considering inflation numbers, I expect this to change.

Global 10Y & 30Y yields continue their uptrend into 2008-2011 levels, further adding pressure to housing markets and debt refinancing as borrowing costs surge. Alas, economic growth continues another unprecedented dichotomy.

Total housing debt hits record highs, with mortgages leading the way. Mortgage delinquency rates remain low; credit card and car loan delinquencies hit levels not seen since 2011 as student loans continue to soar.

Retail market attention is still nowhere to be found, supporting Robinhood’s 30% drop in activity. There was a brief sign of life last week when AI stocks and Bitcoin rallied, but this was short-lived.

Gold is turning up, but still at expected levels.

According to Google Trends, consumers are actively prioritising comfort, wellness, and "pick-me-up" purchases, reflecting depression, which falls in line with purchase expectations during low moods.

Institutional extreme greed is accelerating towards fresh highs, as bearish positioning decreases and SPY volume remains at the normalised lows, showing inactivity to sell at these levels (or buy). Pros are comfortable in their positions with a bullish outlook. These 2 bullish signals are forecasted to average 10% returns over the following year, but we’ve already seen a 16% move from the bottom in the S&P. These returns flip them into contrarian signals for a market top forming, reinforced with retail greed sentiment. Markets can be short-term. Sell in May and go away?

VIX Volatility Index is comfortably low, and volatility has subsided. Investors' concern for the IRAN conflict narrative has passed. Volatility has cooled down right down, right in time for the S&P500 to be in price discovery.

What is really going on with sentiment and attention? I dive deeper with the nuanced social intelligence below to uncover a different story.

Whether you’re a professional, individual, trader or investor, this institutional-grade Social Intelligence analytics delivers high-conviction alpha, sharp contrarian signals and forward-thinking insights to level-up your decisions, forming an essential edge in modern trading/investment systems in the fast-evolving field of behavioural finance.

Traditional sentiment indicators, like the fear and greed index, are lagged and derived from market positioning and price movement- this is not real sentiment. My natural language processing extracts True Sentiment and Social Attention metrics, helping you spot market shifts and events before the crowd with greater accuracy — this is where institutional alpha happens.

Subscribers receive exclusive access to processed Social Intelligence Level 2 Market analysis. Adding these to your screening arsenal can significantly boost your accuracy and timing when making entry/exit investment decisions, while simultaneously working as a signal filter to help you sidestep costly fake-outs in trading.

This proprietary research is for personal and professional use only. It must not be redistributed in any form, and the author must be credited when quoted. This is for informational purposes only and is not financial advice.

Social attention (Pros+retail) ticked up last week on BTC’s brief rally, but quickly faded. Retail attention continues to trend downwards at significant lows. The bullish divergence remains; attention is lower, while prices are higher, signalling a continued bull run.

True Sentiment (Natural language processing) is extremely volatile, leaping from extreme bullish to bearish. My previous analysis is playing out; extreme bullish readings are giving way to a short-term reversal in price, resetting sentiment.

Recent bottom signal stats: AVG max upside 94.6% | AVG max downside -9.9%

Retail’s last moment of attention was panic during the drop to $66k, with a small spike of hope on the first pump to $76k, before being totally exhausted and leaving.

Social attention (Pros+retail) is coming down from significantly hyped levels, after the strong rally in the S&P500 and Apple. Retail attention returned to neutral levels as well, but has since trended back down to inattention, setting the stage for higher prices.

True Sentiment (Natural language processing) is also coming down from extreme bullish, reflecting uncertainty on the next move. It remains in greed, so investors currently have a positive outlook.

Top signal stats: AVG max upside 13.2% | AVG max downside -18.1%

TSLA is underperforming, and Social attention (Pros+retail) has dropped to inattentive. Retail attention has remained at significantly low levels.

True Sentiment (Natural language processing) is at the extreme greed threshold from the dedicated FinFluencers who remain attentive, showing a positive outlook across social media chatter

Mixed signals, but inattention dominates as the signal here. I am expecting a decent rally in the near future.

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