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Counting Sheeple at Trader’s Narrative




Counting Sheeple


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Most traders are familiar with the Ameritrade index. If you’re not, basically it is a snapshot of what the average Ameritrade client is buying and selling.

Here is the most recent list:

ameritradeindex.png

Some traders keep an eye on this list because it can tip them off to what the dumb money is piling into - or out of. I’ve never really used it but I can see its usefulness.

Instead, I decided to see if I could look at the Ameritraders in a different way. So I went to Alexa.com and charted the traffic for ameritrade.com. My thinking was simple: the more people trade, the more they will have to visit the Ameritrade website to put in orders.

Then I plotted the traffic under everyone’s favourite market proxy - the S&P500. Here is the chart:

sheeple1.png

Note that this is only a look back of 2 years and I captured it about a month ago. But it was fortunate that I did, because for some reason Alexa has changed the way they display their data recently. Although they display more historical data, going back to late 2001, it is in a much less palatable visual format.

Anyway, as you can see from the chart, there appears to be a strong correlation between the activity at the Ameritrader website and the market.

Now, I don’t think you can actually trade off this as a tell, but its amusing nevertheless. Sheeple will always be sheeple.

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