Weekly Sentiment Update – Traders Actually Look Bullish!

Permabulls always say everyone's bearish.

And permabears always say everyone's bullish.

Neither side provides evidence for their views.

So let's see how traders are feeling into today's inauguration:

1) VIX Spread – Bullish

The 3-month VIX spread is at +5, which indicates traders are not concerned with volatility.

This is a bullish reading.

2) CNN Fear & Greed Index – Bullish

The Fear & Greed Index is at 67.

F&G operates on a 1-100 scale, and 67 indicates that traders are moderately bullish.

3) AAII Sentiment – Neutral

The latest AAII Sentiment Survey shows that 35.8% of individual investors are bullish, which is below the long-term average of 38.5%.

This is basically neutral.

4) CBOE Equity Put-Call – Bearish

The CBOE Equity-Put Call ratio is at 0.69 with a 3-day moving average of 0.73. This indicates higher-than-average bearishness.

5) ISE Sentiment – Bearish
The ISE Sentiment Index is at just 85 (85 calls for every 100 puts) this afternoon – which is a bearish reading.  And the 10-day moving average is 79.2.

This also indicates bearish sentiment.

Conclusion

Out of 5 sentiment indicators, we have 2 bullish, 1 neutral, and 2 bearish signs.

Now this seems neutral, but I'd argue that traders are actually leaning bullish.

Why?

Because options-based indicators (notably the ISE Sentiment Index) have become fairly detached from equity markets.

Using sentiment as a signal for buys/sells is often a bad idea. And in the case of these options indicators, they seem to be losing value as times go on.

100% FREE eBook

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

Submit