All posts by Michael Comeau
Traders Are Betting on a Market They Hate
Last week, traders got fairly bullish following the massive bounce off Tuesday’s spike low. This week, things are tricker. The North Korea situation is not going away, Hurricane Irma is on the horizon, and the safety trade is picking up, with Treasury yields dropping like rocks. So let’s see what kind of mood the bull is in ahead of the weekend. (click here for a primer on the sentiment indicators below) 1) VIX Spread – Bullish The VIX hit a low of 10.02 last Friday morning, putting it in close range of generational lows. It’s hovering around 12 today. The 3-month spread is at +3.10, which means traders are somewhat bullish. However, they’re clearly not as bullish as last week when this reading was at +4.41. Readings of +5 should be considered outright froth, so we’re not even close to that territory. (click here for a primer on the VIX spread) 2) CNN Fear & Greed Index – Bearish The Fear & Greed Index is at 38, down from 46 last Friday. The F&G Index operates on a 1-100 scale, and a reading of 38 qualifies as modestly bearish. 3) AAII Sentiment – Bearish The latest AAII Sentiment Survey shows that 29.3% of individual investors are bullish. This is up from 25% last week. This 29.3% reading indicates that individual investors are slightly bearish. 4) CBOE Equity Put-Call – Bullish The CBOE Equity-Put Call ratio was at 0.55 Thursday, which is well below the long-term average of 0.655. The 3-day moving average is 0.5933, which is below the long-term average and thus bullish. These numbers indicate that traders are very bullish Conclusion Out of 4 sentiment indicators, we have: 2 bullish (flat from last week) 0 neutral (down from 1 last week) 2 bearish (up from 1 last week) We have 2 bullish, 0 neutral, and 2 bearish indicators this week. This is a slight degradation from last week, when traders were in a fairly buoyant mood. I find it interesting that the CBOE equity put-call ratio has been so bullish as of late. The equity put-call has been below the long-term average for 9 of the past 10 days. Unless traders are shorting massive amounts of calls, it looks like there are a whole lot of folks betting on a big rebound to new all-time highs above SPX 2490. This implies some level of complacency. However, the AAII Sentiment Survey remains depressed, even though the SPX is less than 2% off the record. This says that a lot of people are sitting on the sidelines, or are at least worried about the market. And that’s been a common trend all year. Bullish AAII readings have averaged just 32.9% this year. Let’s compare that to 2007, since people love comparing current market conditions to the last top, even though using a sample size of 1 is completely unscientific. From the start of 2007 to 9/6/2007, bullish AAII readings averaged 41.8%. So the overall market picture is pretty weird. I suspect that for some time, traders have been holding their noses while hitting the buy button, and that certainly seems to be the case today. There’s a lot of money riding on an extension of the bull market. But people don’t trust it. Isn’t it ironic?
Continue Reading -->The Bulls Are Coming Out of Their Caves
Last Friday, traders sentiment was right smack-in-the-middle neutral, perfectly reflecting the back and forth action in the market. On Tuesday, the SPX started on a very weak note, trading down to 2428.20 before the dip buyers stepped in, putting us as high as 2478.26 on Thursday. With this big rebound behind us, let’s see if traders’ moods have gotten better to close out the week. (click here for a primer on the sentiment indicators below) 1) VIX Spread – Bullish Three weeks ago, the VIX hit 17.28, but with markets steadying themselves, it hit a low of 10.02 on Friday morning, not far from generational lows. The 3-month spread is at +4.41, which means traders are very bullish. We’ve seen many readings above 4 this year, which is what I regard serious bullishness. Readings of +5 should be considered outright froth. If the SPX breaks out to new record highs, we coudl see such a reading again. (click here for a primer on the VIX spread) 2) CNN Fear & Greed Index – Neutral The Fear & Greed Index is at 46, up from just 22 last Friday. The F&G Index operates on a 1-100 scale, and a reading of 46 qualifies as as neutral. 3) AAII Sentiment – Bearish The latest AAII Sentiment Survey shows that just 25% of individual investors are bullish. This is down from 28.1% last week. This 25.0 reading indicates that individual investors are bearish, and it’s the lowest reading since May 18. 4) CBOE Equity Put-Call – Bullish The CBOE Equity-Put Call ratio was at 0.57 Thursday, which is well below the long-term average of 0.655. The 3-day moving average is 0.58, which is below the long-term average and thus bullish. These numbers indicate that traders are very bullish Conclusion Out of 4 sentiment indicators, we have: 2 bullish (flat last week) 1 neutral (up from 0 last week) 1 bearish (down from 2 last week) We have 2 bullish, 1 neutral, and 1 bearish indicators this week. So traders are moderately bullish and in a better mood than last week. We’re definitely not in frothy territory, but if the SPX finds its footing again and blasts above 2490 to new all-time highs, that could change quickly. Whether that happens soon is unclear. On the plus side, it looks like traders are looking past today’s weak nonfarm payrolls report (or at least that was already priced in), since financials are very strong. Tech has been very resilient, but it would be nice to see small caps participate on a consistent basis.
Continue Reading -->Sentiment Update: From Depressed to Indifferent
Last Friday, traders became very bearish due to a combination of domestic and international strife, indicating that the market may finally be reacting to political volatility. Markets then powered up off the lows on Monday before a power rally on Tuesday. We’ve drifted sideways since then, so let’s take a fresh look at our 4 sentiment measures to see which way the crowd is leaning heading into this weekend. (click here for a primer on the sentiment indicators below) 1) VIX Spread – Bullish Two weeks ago, the VIX hit 17.28, but with markets steadying themselves, it’s back under 12. The 3-month spread is at +2.65, which means traders are moderately bullish. We’ve seen many readings above 4 this year, which is what I regard serious bullishness. (click here for a primer on the VIX spread) 2) CNN Fear & Greed Index – Bearish The Fear & Greed Index is at 22. The F&G Index operates on a 1-100 scale, and a reading of 22 qualifies as extremely fearful. This is just slightly up from 19 last week, and is one of the lowest readings we’ve seen this year. 3) AAII Sentiment – Bearish The latest AAII Sentiment Survey shows that 28.1% of individual investors are bullish, down from 34.2% last week. This 28.1% reading indicates that individual investors are moderately bearish, and it’s the lowest reading since June 1. 4) CBOE Equity Put-Call – Bullish The CBOE Equity-Put Call ratio was at 0.69 Thursday, which is justl above the long-term average of 0.655. The 3-day moving average is 0.61, which is below the long-term average and thus bullish. These numbers indicate that traders are moderately bullish Conclusion Out of 4 sentiment indicators, we have: 2 bullish (up from 0 last week) 0 neutral (down from 1 last week) 2 bearish (down from 3 last week) We have 2 bullish indicators and 2 bearish indicators, so they cancel each other out. So we’ve gone from very, very negative sentiment last week to pretty much neutral sentiment this week. Unfortunately, that means we don’t have much to go on heading into the weekend. When sentiment is leaning hard one way or the other, that can give us possible opportunities for countertrend trades, but we are definitely not there today. I like to say the bulls always say there are too many bears, and that bears always say there are too many bulls. But today everyone’s wrong: we’re split down the middle
Continue Reading -->Did Mr. Market Just Throw Another Sentiment Boomerang?
Last Friday, sentiment got pretty awful in the wake of North Korea’s threats of an attack on Guam. And then early this week, it went full-on psycho bullish after North Korea blinked and backed off. That was good for me since I’m speculating on a big decline in the VIX… and then it wasn’t so good. With traders fearing that President Trump will have trouble instituting pro-growth policies like tax and regulatory reforms, the VIX spiked as high as 15.77 on Wednesday, up 40% from Tuesday’s 11.25 low. So my nicely profitable trade is now a loser! Let’s take a fresh look at our 4 sentiment measures to see which way the crowd is leaning heading into the weekend. (click here for a primer on the sentiment indicators below) 1) VIX Spread – Bearish The VIX is at 14.82 this morning, well above the July 26 all-time low at 8.84, and also above trend for this year. The 3-month spread is at +0.2, which means the VIX curve is flat. Traders are pricing in quite a bit of short-term volatility, so once again, this reading is bearish. (click here for a primer on the VIX spread) 2) CNN Fear & Greed Index – Bearish The Fear & Greed Index is at 19. The F&G Index operates on a 1-100 scale, and a reading of 19 qualifies as extremely fearful. 3) AAII Sentiment – Neutral The latest AAII Sentiment Survey shows that 34.2% of individual investors are bullish. This 34.2% reading isn’t terribly far off the 38.5% long-term average, and indicates that individual investors are basically neutral. I thought this would be lower, but the number is what it is. 4) CBOE Equity Put-Call – Bearish The CBOE Equity-Put Call ratio was at 0.78 Thursday, which is well above the long-term average of 0.66. The 3-day moving average is 0.69, which is slight above the long-term average. The 10-day moving average is 0.74, which is fairly high. These numbers indicate that traders are very bearish. Conclusion Out of 4 sentiment indicators, we have: 0 bullish 1 neutral 3 bearish The data indicate that sentiment boomeranged in a big way. Traders were pricing in the end of the world last Friday. Then they got happy on Monday and early Tuesday. And now they’re depressed again. You could say volatility is becoming more volatile. And I think this is a great thing because the market’s actually giving some real back and forth action. That means more opportunities for active traders, and action that’s actually interesting to watch. I don’t know about you, but I found June through late July to be agonizing to watch. Maybe the sudden spike in volatiilty means there’s trouble down the road… but at least we’ll be awake for it. Now I’m still speculating on a decline in the VIX. To be more specific, I am: -Long VXX puts -Short VXX call spreads Will the trade go profitable again? The ideal situation is a repeat of last Friday to Monday, when sentiment boomeranged from extreme fear to extreme greed in the blink of an eye. I guess I’m about to find out if that’s just wishful thinking…
Continue Reading -->Is the Big VIX Move Over?
Fear is here, courtesy of North Korea. Just a couple weeks after the VIX hit an all-time low, volatility is exploding as traders start to price in a potential conflict with North Korea. This morning, the plot thickened after China said it won’t help North Korea if it launches missles at the US. However, it would not stand for the US attacking first. Way back in July, I used options to make a leveraged bet on the VIX, and the huge spike in the VIX put the trade in the green. I took off part of the position yesterday just before the equity market close, and will likely close out the rest this morning. At the end of this piece, I’ll outline why I may soon speculate on a VIX collapse. That makes now a great time to go through our 4 sentiment indicators to see if the crowd also sees sunshine ahead for equities. (click here for a primer on the 4 sentiment indicators below) 1) VIX Spread – Bearish The VIX is at 16.57, which means it’s nearly doubled the July 26 all-time low at 8.84. The 3-month spread is at -1.05, which means the curve is inverted and short-term fear is very, very high. (click here for a primer on the VIX spread) 2) CNN Fear & Greed Index – Bearish The Fear & Greed Index is at 31. The F&G Index operates on a 1-100 scale, and a reading of 31 qualifies as Fearful. 3) AAII Sentiment – Neutral The latest AAII Sentiment Survey shows that 33.7% of individual investors are bullish. This 33.7% reading isn’t terribly far off the 38.5% long-term average, and indicates that individual investors are basically neutral. 4) CBOE Equity Put-Call – Bearish The CBOE Equity-Put Call ratio was at 0.88 Thursday, which is well above the long-term average of 0.66. The 3-day moving average is 0.79, which is also well above the long-term average. These numbers indicate that traders are very bearish. Conclusion But of 4 sentiment indicators, we have: 0 bullish (down from 2 last week) 1 neutral (flat) 3 bearish (up from 1 last week In July, the crowd was absolutely nutty. But as we’ve seen many times this year, at the first sign of trouble, fear is getting priced in awfully quickly. The action is quite reminiscent of the April 13 volatility spike when the US dropped a 22,000 bomb on ISIS forces in Afghanistan. North Korea and Syria were also in the news. On that day, the CBOE equity put-call jumped to a whopping 0.96 with a 3-day moving average at 0.81. And as of yesterday, the CBOE equity put-call jumped to 0.88 with a 3-day moving average of 0.77.That dip was very short liveed, and the SPX soon spiked 60 points. This chart shows the SPX vs. the VIX (VIX is the purple line, with the April volatility spike highlighted: So I’m looking to close out the rest of my VIX position, and actually speculate on a VIX decline, likely through VXX put options. (UPDATE at 9:45 a.m. ET: I am now short VXX call spreads, and long VXX puts) To make a very long story short, the term structure of VIX futures puts a downward force on VXX over the long run. Shorting volatility has been the best trade of 2017. But the recent volatility spike likely had traders being forced to do 3 things: 1) Close outright short volatility bets on VIX/VXX puts cover shorts 2) Buy SPX/SPY/QQQ puts and VIX/VXX calls to hedge their short volatility exposure And now we’re looking at an inverted VIX curve and traders likely overpaying for VIX options. Meanwhile, China’s posture indicates that they want no part of a North Korea offensive. Saying they won’t tolerate a US aggression allows them to save face, and seems like a happy medium. If the fear gets ratcheted down, I suspect the VIX will be back in the 10-12 range in fairly short order. I’ll provide an update if I actually make a trade.
Continue Reading -->T3’s Take 3: Nuclear Summer
1) Fear Returns Traders were on edge again today on fears of a conflict with North Korea. Japan and South Korea warned that they would not tolerate aggressions from North Korea, including a missile launch at Guam. News reports indicate that Japan moved a PAC-3 Patriot missile system to Tokyo to shoot down North Korean missiles. Sentiment has been rapidly declining. The CBOE equity put-call ratio hit 0.83 yesterday, which is the highest reading since April 13, 2017. And what happened on April 13, 2017? The US military dropped that giant 22,000 bomb on ISIS forces on Afghanistan, which coincided with escalating tensions with North Korea. And a week prior, the US attacked Syria. As of yesterday’s close, the 3-day moving average for the equity put-call is now 0.76, which indicates negative short-term sentiment. And tomorrow morning, it should be much, much higher, since traders often buy lots of put options when the market drops quickly. Stocks immediately sold off at the open, and volatility expectations went into overdrive. the VIX rose as high as 16.17. putting it 82% above the July 26 record low at 8.84. That put my long VIX options trade nicely in the green. I used the pop to exit a big part of my position. I’ll look to get out of the rest tomorrow, and depending upon what I see tomorrow, I may end up getting short the VIX heading into the weekend. 2) Ugly Action The market did nothing in June, but judging by today’s big move in the VIX, August may be another story altogether. The SPX fell as low as 2444.91 this morning before bouncing, and then driving lower into the close to at 2438.21, down -1.5%. We saw relative weakness in key areas of the market like large-cap technology, biotechnology, and small caps. Traders watch these groups to judge the market composure. High-yield, regional banks, and materials ETF’s also took big hits. This implies that traders are fearful of the overnight news flow. Meanwhile, “risk off” instruments like US Treasuries, silver, gold, and utilities stocks performed well, with the Vaneck Vectors Gold Miners ETF (GDX) rising 1.6%. In early June, my colleague Jeff Cooper delivered compelling analysis on gold, saying the folowing: The breakout above $1280 is confirmed by trade over $1295, which issues significantly higher projections which we will detail before the weekend. At the same time, a close in gold above $1285 and especially $1295 on the important Friday weekly closing basis validates the idea of a new leg higher. Gold is now flirting with $1295, so keep an eye on it. If Jeff is correct, we could see a major rally. 3) Scott Redler’s Take: 75% Chance of Stormy Weather This afternoon, Scott Redler appeared on CNBC’s Futures Now Show to discuss the market’s recent breakdown. He estimated that there was a 75% chance that we’d see more trouble ahead. In terms of specific market levels to watch, Scott said it was important to see how the SPX and QQQ handled their respective 50 day moving averages at 2455 and $141.35. Both levels were lost today, so it’s clear that the bears have scored their first real victory in quite some time. Click here to watch Scott’s segment
Continue Reading -->The Bull Market Can Continue Forever. Really?
It’s foolish to read too much into any one anecdote, especially when it comes to soundbites and one-liners. But this statement from Leuthold Chief Investment Strategist Jim Paulsen on CNBC really caught my eye: “We’ve got a fully employed economy, rising real wages. We restarted the corporate earnings cycle. We’ve got strong confidence among business and consumers,” he said on “Squawk Box.” “The kick is we can do all of this without aggravating inflation and interest rates,” he said. “If that’s going to continue, I think the bull market could continue to forever.” To be fair, Mr. Paulsen tempered his statement with by saying “if that’s going to continue.” Nonetheless, it seems a little overboard to even imply a bull market can go on forever. That makes now a great time to go through our 5 sentiment indicators to see if the crowd also sees sunshine ahead for equities. (click here for a primer on the 5 sentiment indicators below) 1) VIX Spread – Bullish The VIX is at 9.82, which puts it within range of generational lows. That puts the 3-month spread at 3.97, which means that traders are fairly bullish. (click here for a primer on the VIX spread) 2) CNN Fear & Greed Index – Bullish The Fear & Greed Index is at 63. The F&G Index operates on a 1-100 scale, and a reading of 63 qualifies as mildly greedy. 3) AAII Sentiment – Neutral The latest AAII Sentiment Survey shows that 36.1% of individual investors are bullish. This 36.1% reading is roughly in-line with the 38.5% long-term average, and indicates that individual investors are basically neutral, even though the major indices are still near all-time highs. 4) CBOE Equity Put-Call – Bearish The CBOE Equity-Put Call ratio was at 0.71 Friday, which is above the long-term average. The 3-day moving average is 0.70, which is above the long-term average. These numbers indicate that traders are moderately bearish. 5) ISE Sentiment – SUSPENDED! For months, I’ve been pondering kicking out this sentiment indicator since it has seemingly lost predictive value. However, ISE has announced it has suspended the index, so now I’m being forced to eliminate it. I’ll likely replace it with the CBOE Skew index (SKEW), which uses options prices to determine whether traders are pricing in extreme risks. Conclusion Out of 4 sentiment indicators, we have: 2 bullish 1 neutral 1 bearish So it looks the crowd is in a more neutral state of mind after getting nutty a couple weeks ago. They definitely don’t believe in a “this bull market can last forever” scenario. That’s been pretty common this year. We’ve seen a few stretches with hyper-bullish sentiment, but they’ve never lasted. That’s been very frustrating for the bears, because these rapid pullbacks in sentiment seem to prevent the market from topping out. At the late 2007 market top, sentiment was incredibly bullish, but we’re seeing nothing of the like in 2017. So I’ll ask a question: can the market top without the bulls buying in emotionally? I really don’t know the answer.
Continue Reading -->Are the Bulls Still Crazy?
On July 21, I went long VIX calls based on what I saw as: A) Bullish sentiment gone truly out of control B) My expectation that volatility was due for a reversion to the mean. And subsequently, the VIX hit a record low of 8.84, leaving me feeling like a dope. It’s since pushed back above 10, so let’s take a fresh look at sentiment to see just how confident the crowd is. (click here for a primer on the 5 sentiment indicators below) 1) VIX Spread – Bullish The VIX is sitting around 10.50 this morning. That puts the 3-month spread at 3.29, which means that traders are moderately bullish. However, this is a major downshift from the recent readings around 5. (click here for a primer on the VIX spread) 2) CNN Fear & Greed Index – Bullish The Fear & Greed Index is at 72. The F&G Index operates on a 1-100 scale, and a reading of 72 qualifies as moderately greedy. This indicator has been subdued for most of 2017, but it has been more bullish than usual lately. 3) AAII Sentiment – Neutral The latest AAII Sentiment Survey shows that 34.5% of individual investors are bullish. This 34.5% reading is roughly in-line with the 38.5% long-term average, and indicates that individual investors are basically neutral, even though the major indices are still near all-time highs. 4) CBOE Equity Put-Call – Bearish The CBOE Equity-Put Call ratio was at 0.63 Friday, which is in-line with the long-term average. The 3-day moving average is 0.66, which is actually above the long-term average. These numbers indicate that traders are moderately bearish. 5) ISE Sentiment – Neutral The ISE Sentiment Index is at 76 (meaning 76 calls bought for every 100 puts. The 10-day moving average is 93.4 (93 calls for every 100 puts) A 10-day moving average of 93.4 does indicate more demand for puts than calls, but relative to recent history, it’s actually a bit high. So I’ll call it neutral. Conclusion Out of 5 sentiment indicators, we have: 2 bullish (down from 4 last week) 2 neutral (up from 1) 1 bearish (up from 0) So it looks the crowd is getting back to a more neutral state of mind after getting a little nutty last week. That’s been pretty common this year. We’ve been getting occasional stretches of hyper-bullish sentiment, but they tend to die pretty quickly.
Continue Reading -->Why I Am Betting on a Big Spike in the VIX
Traders are too bullish. Seriously. I typically start this report by saying that “permabears always say everyone’s bullish.” They’re wrong 99% of the time. Today is that 1% of the time when they’re right. Let’s go through our 5 sentiment indicators so you can see the numbers behind my reasoning. (click here for a primer on the 5 sentiment indicators below) 1) VIX Spread – Bullish The VIX hit 9.39 early Friday, putting it awfully close to the 9.37 generational low set back on June 9. That puts the 3-month spread up to 4.57, which means traders have very little fear of volatility. This is up from last week’s 4.0 reading, and qualifies as extremely bullish. (click here for a primer on the VIX spread) 2) CNN Fear & Greed Index – Bullish The Fear & Greed Index is at 76, up from 51 last week. The F&G Index operates on a 1-100 scale, and a reading of 76 qualifies as fairly greedy. This indicator has been subdued as of late, so I was a bit surprised to see it this high. 3) AAII Sentiment – Bullish The latest AAII Sentiment Survey shows that 35.5% of individual investors are bullish, up substantially from 28.2% last week. This 35.5% reading is basically inline with the 38.5% long-term average, and indicates that individual investors are basically neutral. This has been the case all year, even though the major indices have been hitting new all-time highs fairly regularly. 4) CBOE Equity Put-Call – Bullish The CBOE Equity-Put Call ratio was at 0.53 yesterday, which is a very bullish reading The 3-day moving average is 0.57, which is well below the long-term average. These numbers indicate that traders are very, very bullish. 5) ISE Sentiment – Bullish The ISE Sentiment Index is at 138 (meaning 138 calls bought for every 100 puts. The 10 day moving average is 105 (105 calls for every 100 puts) Now that 10-day moving average of 105 is technically neutral, I’ll count it as bullish because it’s been subdued for so long. The year-to-date average is just 87, so a 10-day moving average of 105 is a big change in trend. Conclusion Out of 5 sentiment indicators, we have: 4 bullish (up from 1 last week) 1 neutral (down from 3 0 bearish (down from 1) I troll the bears constantly for spreading the outright lie that everyone’s too bullish. But again, today, the bears are 100% correct. It’s not 1999 all over again, but still — traders are extraordinarily bullish, which can sometimes (but not always) mark a top. Remember, using sentiment indicators to time the market is often a fool’s game. But it’s not often that we see so many sentiment indicators pointing in the exact same direction. There is almost no fear and no volatility out there… which means we could be about to see a spike in fear and volatility. Now, let’s be clear: I am talking my book, and I freely admit that my positioning could impact my viewpoint. Earlier this week, I went long VIX call and I own VIX bull put spreads. I am speculating on a market decline that would spike the VIX, preferably over 17 within the next few weeks. And I may even add some SPY or QQQ puts. As we all know, the theme this year has been: Equities steadily grinding higher Volatility near zero Sentiment leaning mostly neutral I think things are about to change.
Continue Reading -->Weekly Sentiment Report: Are You Afraid of the Big Bad Earnings Wolf?
Are traders afraid of earnings? That’s the question to ask following JP Morgan’s (JPM) kick-off of second-quarter earnings season. Last week, traders were in a pretty happy mood despite a pickup in volatility, particularly in tech stocks. Active traders are enjoying the back-and-forth action, because it’s bringing in more opportunities. But let’s take a deeper look at market psychology to see how fear is in the market ahead of a pivotal earnings season. So let’s take a look out our 5 sentiment indicators to see just how bearish traders are after yesterday’s volatility spike. (click here for a primer on the 5 sentiment indicators below) 1) VIX Spread – Bullish The VIX broke under 10 today in the aftermath of the weak retail sales and CPI numbers, which presumably support and accomadative Fed policy. That puts the 3-month spread up to 4.0, which means traders have very little fear of volatility. This is up from last week’s 2.8 reading. (click here for a primer on the VIX spread) 2) CNN Fear & Greed Index – Neutral The Fear & Greed Index is at 51, up from 44 last week. The F&G Index operates on a 1-100 scale, and a reading of 51 is right smack in the middle. 3) AAII Sentiment – Bearish The latest AAII Sentiment Survey shows that just 28.2% of individual investors are bullish, down slightly from 29.6% last week. This 29.6% reading is well below the 38.5% long-term average, and indicates that individual investors still don’t trusth the market. This has been the trend all year, even when the SPX was hitting record highs with basically no volatility. In fact, despite the market’s stunning resilience since the election, the average bullish reading this year is just 33.3%. Since so many traders make comparisons to 2007, let’s take a look at the averages back then. From the start of 2007 to July 12, 2007, the average was 41.6%. That’s a huge difference. 4) CBOE Equity Put-Call – Neutral The CBOE Equity-Put Call ratio was at 0.62 yesterday, which is a slightly bullish reading The 3-day moving average is 0.64, which is right in-line with the long-term average. These numbers indicate that traders are modestly bullish. 5) ISE Sentiment – Neutral The ISE Sentiment Index is at 85 (85 calls bought for every 100 puts. The 10 day moving average is 101.6 (101.6 calls for every 100 puts) This indicates that traders are neutral. Conclusion Out of 5 sentiment indicators, we have: 1 bullish (down from 2 last week) 3 neutral (up from 2) 1 bearish (flat) We’re seeing a tad less bullishness relative to last week. The market’s had a pretty nice little move off the June lows, with decent strength in biotechs and small caps. But it looks like traders aren’t quite ready to put the pedal to the metal as we start to move into the heart of earnings season. Netflix‘ (NFLX) report on Monday could indeed be pivotal since the reaction will tell us how the market may treat other tech sector reports.
Continue Reading -->