Since the market peaked in October 2007, I have pointed out (repeatedly) when TBP traffic soared in response to the credit crisis. Each time, we noted this was a good contrary indicator, and used it as a good short term buy signal for a trade.
And after each short term rally, the public angst was proven correct, and lower lows were had.
This month, I could not help but notice the opposite — that traffic dropped substantially,- from over 2.5 million page views in March to just over 2 million in April.
Not coincidentally, we had a rip roaring rally over the same period of time (during which we were suitably bullish). As the economy’s free fall slowed (improving 2nd derivative), the traffic slipped.
Whether it was the stimulus or the Fed funded parachutes opening, people searched less for news on the crisis. I presume this is a function of psychology — investors are less nervous, spend less time flailing about for answers, and revert back somewhat towards their old media consumption habits. AKA Complacent.
I contacted a dozen other bloggers, and nearly all were experiencing the same traffic slide. (Even the exception said their traffic was mostly due to a new Twitter related project).
Which leads to the obvious question: From a sentiment perspective, does this have any meaning? We did well using the oversold/high traffic spikes as a long side entry point — at least for a trade. Does this mean we can use the overbought, traffic drop off as a sell signal?
We clearly do not have enough data to draw a firm conclusion. However, if the pattern holds, we should see a short term pullback (not a wild conjecture given how far this market has run in so short a period), followed by higher highs.
The psychology has clearly shifted. But so too has the risk/reward calculus.
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Previously:
Blog Traffic as a Contrary Market Indicator (February 4th, 2008)
http://www.ritholtz.com/blog/2008/02/blog-traffic-as-a-contrary-market-indicator/
Traffic Peaked Again Near Short Term Bottom (July 18th, 2008)
http://www.ritholtz.com/blog/2008/07/traffic-peaked-again-near-short-term-bottom/
Crazy Fannie/Freddie Traffic Spike! (September 8th, 2008)
http://www.ritholtz.com/blog/2008/09/crazy-fanniefreddie-traffic-spike/
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