Market sentiment is settling down again

In NFTRH we projected a market bounce (before the fact, when such info is useful, eh?) and noted that the bounce should not be what the post-September bounce was. This was due to sentiment indicators like Smart/Dumb money not becoming as extreme as in August/September, but also due to other inputs like the state of the VIX (not nearly as hysterical as last summer) and the maturing state of intermediate bearish trends and technical patterns on the broad market (see WLSH, TRAN, RUT, SML, NYA, etc.).

Arguing for the bounce were items like said Smart/Dumb money and the aggregated Optimism/Pessimism data (compliments of Sentimentrader). Also, there was the extremely net short positioning of small specs (i.e. the little guy who is often most wrong at short-term bounce or topping points). But the bounce is wearing these things off and sentiment is settling back toward a calmer neutral area. The bulls are getting a bit more comfy now and while I have SPX 2000 as the best bounce point, there is no directive that it has to go that high.

market sentiment indicators

 

 

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