You suggest that the trend will reverse only when optimistic extremes are reached........using your logic, one can speculate that the selling may continue until extremes in pessimism are reached. Not even close right now.
Exactly chainik, a "snapshot" of sentiment has it neutral right now. As I think we discussed last Friday, I have no doubt that this Rydex "diversion" can continue and the markets may very well tread water or decline, but that just means another buyable low. What it comes down to is that we have no idea which way sentiment is "pointed" near-term. This is why, and I've said this previously, I don't use sentiment as a near-term trading tool. I only use it as a clue to gauge the larger trend, and in those time frames I can't see how this bull ends without some kind of optimistic extremes, regardless of where sentiment is heading in the near-term. Geez, it would be nice if we could even get to the levels seen in early 2004!
In other words here's my thinking: The cyclical bull since Oct 2002 is still in play, so I focus on charts which are showing me clear bullish set-ups, the likes of HD, CFC, WB, SINA (sorry mc!-g), AA etc... As for the SMH, I have been unclear on semis for some time and have steered clear except for AMD which I think just finished up that flat on the daily today.
ut I see very mixed market with weak former leaders
As implied by the previous paragraph I wholeheartedly agree chainik. But poke around, there are many more bullish underlying charts and index/sector charts than bearish ones IMO, including the $SPX...and that one looks good in EVERY time frame....most importantly on the weekly chart. |
