Trump Made Traders Like the Market Again

Permabulls always say everyone's bearish.

And permabears always say everyone's bullish.

Neither side provides evidence for their views.

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

According to 5 sentiment measures I track, traders hated the market ahead of the November 8 US Presidential election.

As you'll see, that's clearly changed.

Let's Dive In:

1) AAII Sentiment – Bullish

The latest AAII Sentiment Survey shows that 46.7% of individual investors are bullish, which is well above the long-term average of 38.5%.

This is the highest level seen since February 2015.

2) CNN Fear & Greed Index – Bullish

The Fear & Greed Index is at 62.

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

This 62 reading indicates moderate bullishness.

3) VIX Spread – Bullish

The 3-month VIX spread is at +4.69, which indicates traders are pricing in very low near-term volatility.

This means traders are bullish.

4) CBOE Equity Put-Call – Neutral

The CBOE Equity-Put Call ratio is at 0.65, with a 3-day moving average of 0.62. This indicates slightly higher-than-average bullishness, but nothing extreme, so I'll leave it in the neutral category.

5) ISE Sentiment – Bearish

The ISE Sentiment Index is at just 79 (79 calls for every 100 puts) this morning — which is a bearish reading.  And the 10-day moving average is 82.9. That also indicates bearish sentiment.

*******

Pre-election, 5 of 5 sentiment indicators were reading bearish.

Now we have 3 bullish indicators, 1 neutral, and 1 bearish.

So Trump not only changed the minds of a lot of voters, he's changed traders too.

And if the S&P 500 makes new all-time highs again, we could easily see the bulls go 5 for 5 in our next sentiment check.

100% FREE eBook

Learn powerful concepts from the $795 Trading the Pristine Method Course.

Submit