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Blog Traffic Reading: Complacent!

Posted By Barry Ritholtz On April 30, 2009 @ 9:15 am In Contrary Indicators,Markets,Psychology,Web/Tech | Comments Disabled

Since the market peaked in October 2007, I have pointed out [1] (repeatedly) when TBP traffic soared [2] in response to the credit crisis. [3] 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 [4] in April.

Not coincidentally, we had a rip roaring rally over the same period of time (during which we were suitably bullish [5]). 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.

>

Previously:
Blog Traffic as a Contrary Market Indicator [1] (February 4th, 2008)

http://www.ritholtz.com/blog/2008/02/blog-traffic-as-a-contrary-market-indicator/

Traffic Peaked Again Near Short Term Bottom [2] (July 18th, 2008)

http://www.ritholtz.com/blog/2008/07/traffic-peaked-again-near-short-term-bottom/

Crazy Fannie/Freddie Traffic Spike! [3] (September 8th, 2008)

http://www.ritholtz.com/blog/2008/09/crazy-fanniefreddie-traffic-spike/


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2009/04/blog-traffic-reading-complacent/

URLs in this post:

[1] pointed out: http://www.ritholtz.com/blog/2008/02/blog-traffic-as-a-contrary-market-indicator/

[2] TBP traffic soared: http://www.ritholtz.com/blog/2008/07/traffic-peaked-again-near-short-term-bottom/

[3] credit crisis.: http://www.ritholtz.com/blog/2008/09/crazy-fanniefreddie-traffic-spike/

[4] 2 million: http://www.sitemeter.com/?a=stats&s=sm2ritholtz&r=33

[5] suitably bullish: http://freakonomics.blogs.nytimes.com/2009/03/11/when-barry-ritholtz-talks-people-listen/

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