Bears Trump Bulls Ahead of the Presidential Steel Cage Match

Permabulls always say everyone's bearish.

And permabears always say everyone's bullish.

Neither side ever provides evidence for their views.

So I regularly run through a variety of sentiment measures to get an accurate reflection of the market's mood.

According to 5 sentiment measures I track, traders are certainly looking bearish heading into November 8's Presidential election.

Donald Trump's wild-card image seems to be roiling traders' nerves because of all the possible variables.

Does he win?

Does he lose?

Does he lose and contest the outcome?

Who really knows at this point?

So let's drill down to the numbers:

1) AAII Sentiment – Bearish

The latest AAII Sentiment Survey shows that just 23.6% of individual investors are bullish, well below the long-term average of 38.5%.

But what's really interesting is that bullishness has been below the long-term 38.5% average for 51 straight weeks, and 84 of the last 86.

2) ISE Sentiment – Bearish

The ISE Sentiment Index is at just 31 this morning — that's just 31 calls for every 100 puts.  And the 10-day moving average is 80 — that's the type of reading you see after a major volatility spike, not before one.

3) CBOE Equity Put-Call – Bearish

The CBOE Equity-Put Call ratio has been over 1 for the past 4 days. That indicates serious bearishness.

4) CNN Fear & Greed Index – Bearish

The Fear & Greed Index is at 17.

F&G operates on a 1-100 scale, and 50 is neutral.

This 17 reading indicates extreme fear.

5) VIX Spread – Bearish

The 3-month VIX spread is at -0.3, which indicates traders are pricing in high near-term volatility. This is bearish.

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So we have all 5 of these sentiment indicators pointing bearish, and they're likely to get more bearish as traders hedge against possible post-election downside.

Interestingly, I hear a lot of traders chattering about going long into the election on the assumption that downside is already priced in.

We'll certainly see!