General Stock Market Commentary
 

MON Sector Strength – TUE Rates – WED Medium-Term – THU Commodities Currencies – FRI Sentiment – SAT Longer-Term

The Short-Term Trend

The PMO index is looking a lot closer to the low of its range. This the level where we start looking for the market to bottom out, and for a new short-term uptrend to begin.

The new 52-Week low was definitely elevated today. When the PMO index is near the low of its range, that is when a spike in the new lows is often a signal that the market is washing out, and that a bottom is near. Now we just wait for a key reversal day, and/or a day in which the number of new 52-week lows decreases way down to a harmless level.

52-Week low for Deutsche Bank. The weakness in this bank is back on the radar screen. This article does a good job discussing the issues. A warning though, it isn’t particularly optimistic.
 

Sentiment

The Investor’s Intelligence Newsletter Writers Sentiment Survey came in at about 55% bulls this week. 55% is the point at which there is too much bullishness from a contrarian point-of-view. So the big selloff this week makes sense. Now we wait for bullishness to drop down to about 45% or lower as the next buying opportunity. In my opinion, this is a really good survey, and it has worked very well for me for many years. Just so you know, it tends to become less important during bear markets, and also during very bullish periods such as 2017.

The put/call ratio has also worked well for me over the years. In the chart below, I invert the 10-day ratio (to create a call/put ratio) and overlay the overbought/oversold indicator on the SPX. This chart says to wait before making new purchases. 

As a side note, I think this retest of the lows would have happened with or without all the headlines and drama from the White House. But we’ll never know. I should also note that these sentiment indicators are all short and medium-term, and which means they project out to a period of about the end of April or May.