{"id":14933,"date":"2017-07-31T09:45:26","date_gmt":"2017-07-31T14:45:26","guid":{"rendered":"http:\/\/www.t3live.com\/blog\/?p=14933"},"modified":"2017-09-29T08:10:38","modified_gmt":"2017-09-29T13:10:38","slug":"are-the-bulls-still-crazy","status":"publish","type":"post","link":"https:\/\/blog.t3live.com\/2017\/07\/31\/are-the-bulls-still-crazy\/","title":{"rendered":"Are the Bulls Still Crazy?"},"content":{"rendered":"

On July 21, I went long VIX calls<\/a><\/strong><\/span> based on what I saw as:<\/p>\n

A) Bullish sentiment gone truly out of control
\nB) My expectation that volatility was due for a reversion to the mean.<\/p>\n

And subsequently, the VIX hit a record low of 8.84, leaving me feeling like a dope.<\/p>\n

It's since pushed back above 10, so let's take a fresh look at sentiment to see just how confident the crowd is.<\/p>\n

(click here<\/a><\/strong>\u00a0for a primer on the 5 sentiment indicators below)<\/p>\n

1) VIX Spread – Bullish<\/strong><\/p>\n

The VIX is sitting around 10.50 this morning.<\/p>\n

That puts the 3-month spread at 3.29, which means that traders are moderately\u00a0bullish.<\/p>\n

However, this is a major downshift from the recent readings around 5.<\/p>\n

(click here<\/a>\u00a0<\/strong>for a primer on the VIX spread)<\/p>\n

2) CNN Fear & Greed Index – Bullish<\/strong><\/p>\n

The Fear & Greed Index is at 72.<\/p>\n

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.<\/p>\n

3) AAII Sentiment – Neutral<\/strong><\/p>\n

The latest AAII Sentiment Survey shows that 34.5% of individual investors are bullish.<\/p>\n

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.<\/p>\n

4<\/strong>) CBOE Equity Put-Call – Bearish<\/strong><\/p>\n

The CBOE Equity-Put Call ratio was at 0.63 Friday, which is in-line with the long-term average.<\/p>\n

The 3-day moving average is 0.66, which is actually above the long-term average.<\/p>\n

These numbers indicate that traders are moderately bearish.<\/p>\n

5) ISE Sentiment – Neutral<\/strong><\/p>\n

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)<\/p>\n

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.<\/p>\n

Conclusion<\/strong><\/p>\n

Out of 5 sentiment indicators, we have:<\/p>\n