Expecting A Move Lower

The conditions are continuing to line up for a move lower:
  • Market is overbought.
  • Rydex traders finally became aggressively long yesterday. They held out this entire rally, until now.
  • We had a second day in a row where breadth lagged the market.
  • Sentiment surveys (Investors Intelligence bears at 21%) and anecdotal sentiment are showing complacency.
My best guess is that we see a down day today. However, it is possible that option expiration will delay the move lower until next week.

3 comments:

nicasurfer said...

Dumb question, how do find out what the Rydex traders are doing?

Onlooker said...

Good call. This market is definitely getting "tired", with negative divergences and momentum slowing. A significant top would seem to be nigh.

Tsachy Mishal said...

I get the Rydex data from sentimentrader.com, which is a paid site. I think its available for free on the Rydex site but Sentimetrader lays out the data nicely and graphs it.