Friday Market Sentiment
Disclaimer: All charts and comments are intended for education and discussion purposes only. No investment recommendations are being offered. Please do your own research and take responsibility for all investment decisions that you make. Questions and comments related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Breadth | THU - Commodities & Currencies | FRI - Market Sentiment | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |
The stock market certainly felt good today. It seems as though we have kicked off our end of year rally and some money will be made. However, this probably was a bounce off the oversold lows of a trading range. I base this on the high level of new lows which indicate underlying distribution... despite the excellent advance by the averages. But I'll take what I can get in this market.
Sentiment went in different directions this week. The bloggers and individuals really helped us out with their depressed views of the market and provided fuel for the new short-term uptrend. But the newsletter writers are really spoiling the party with their extreme bullish sentiment which will be a real drag on future stock price appreciation. These surveys present a mixed picture, but I believe the writers are more important and work against stocks. Based on a contrarian interpretation of the newsletter writer's survey, the market is not ready to begin a sustained, multi-month, intermediate cycle advance.
Above is broader view the writer's sentiment showing both bulls and bears, both of which continue to move in the wrong direction. A sustained market advance is very difficult to achieve if investors are too optimistic, and it looks like our new rally will likely burn out quickly based on this sentiment picture.
The put /call ratios are out-of-sync at the moment and not offering much help. The total put /call ratio is at the wrong level to help with stock prices. The equity-only ratio is more favorable, but I would expect it to be forming a nice peak like the prior periods rather than the sideways squiggly currently shown. Bottom-line, I think this chart is showing that the market is trapped within a trading range and needs time to resolve itself. In the meantime, we'll be taking advantage of any uptrends we get even if they only last a few weeks or so.
