posted 7.20 a.m. est
Pre-open Friday 26th March
Note: yesterday’s graphic was incorrectly dated, apologies.
On the index charts yesterday’s bar looks like a bearish reversal day but on the profile you can see that the Value Area was higher and wider on increased volume and the only damage so far was a slight probe below First Level S/R at 1161.50.
We no longer have green at the top of the rally (see highlighted comment below) so we are slightly more likely to see a correction here but I’m staying ST bullish until at least ES consolidates below 1161.50.
Sentiment:
Bears jumped on yesterday’s reversal bar and some have declared it a top day but the latest data from the AAII public poll doesn’t support this. The market was up last week and this week and yet the AAII Bulls have decreased from 45.3% to 35.4% and now to 32.4% and the Bears have increased from 25.3% to 29.9% and now 34.7%. At a top you would expect to see the opposite, i.e. Bears throwing in the towel and Bulls rampant. Notice there were more Bears this week than Bulls. I cannot find a top week of any significance in the last ten years that had more AAII Bears than Bulls. This suggests either there’s a final surge to a top to squeeze out the bears or top pickers are just plain wrong.
As I’ve discussed though other Sentiment indicators are looking extreme or close. The Rydex timers turned very bullish (my version of the Rydex Assets ratio fell back on Thursday to 2.57 after the spike up to 3.18 on Wednesday), VIX hit a new closing low this week and although Option ratios are off a little this week they could easily hit extreme readings with another price high.
