"Sentiment".......Given our recent discussions here, have had my ears open to sentiment talk, and here's something in today's Barron's.....which may mean more to you than to me.....and which, btw, seems to paint a picture quite different from what those Rydex charts were supposed to be telling us..????...g.:
<<The view of the stock market as too complacent also finds easy corroboration in the options market. The 30-day risk forecast as quantified by the VIX volatility index has crept up from a historically low level, but it registers hardly any increased anxiety heading into the traditionally more volatile fall season. Early last week, despite the pall cast by volatile oil prices, option investors were spending less than 50 cents on protective puts for every dollar spent on bullish calls, says Safian Investment Research President Ken Safian. This is well below levels of about 93 cents in late-April, around the time stocks began this leg of its run-up.
In fact, sentiment appears downright smug when one strips out energy stocks from the S&P 500, as Natexis Bleichroeder technical strategist John Roque has done (see chart). Without the lift provided by highflying energy stocks, the 500-stock benchmark has made little progress over the past 22 months, is well off its December 2004 high and remains below its 50-day and 200-day moving averages.
"We believe there is important technical deterioration occurring below the surface of the otherwise placid S&P 500," Roque notes. "Nothing big, but important enough not to be caught asleep on the beach." This is particularly so if the leading oil stocks, which Roque believes are overbought, begin a correction few market-watchers seem to expect.>>
Here's the chart referred to....interesting....SPX with and without energy stocks....Small size....but hope it comes through visibly enough.......g
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