Miserable Millionaires? Could Be a Good Thing

GSO Images | Photographer's Choice | Getty Images

The fact that millionaires are stuck in a funk might seem like a bad sign for markets and especially for the luxury economy.

A new survey from Spectrem Group shows that millionaire investor sentiment is at a five-month low. It’s crashed from a high of 10 (very bullish) in March to just one in June, meaning the rich are basically neutral and headed toward bearish.

This follows a steady stream of indicators that are flashing red for the rich. Their spending is slowing. They’re not putting money into stocks. And their top concerns are the political environment, the national debt and other issues that aren’t likely to be solved anytime soon.

All of this would seem to be a bad omen for the economy. After all, the one percent owns about half of the individually held stocks in the U.S., and the top five percent of earners accounts for up to a third of consumer outlays. If they’re cranky, the United States is cranky.

But there is a possible bright side to the misery of millionaires – and I’m not talking schadenfreude. Maybe a bearish signal from millionaires could mark a market bottom.

If we take a look at the S&P alongside the millionaire investor index we see two things. First, there is a pretty good correlation between the mood of millionaires and the market. Millionaire optimism goes up when markets go up, and it goes down when markets go down.

The second lesson is that lows in millionaire sentiment are often followed by market rallies. The last time we saw maximum bear sentiment from the millionaires was October of 2011. Their pessimism was followed by the huge rally in the S&P, which continued into the early spring.

The previous fall was in the March of 2011, which also preceded a mini rally in the S&P.

Of course, the predictive effects of the millionaire sentiment don’t always work. Millionaires turned bearish in the spring of 2011, and the market continued to fall even further throughout the summer – along with their sentiment.

Still, the last time millionaires were bearish, the markets followed with a strong rally.

Do you think millionaires are a leading indicator, negative indicator or non-indicator for financial markets?

-By CNBC's Robert Frank
Follow Robert Frank on Twitter: