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.


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.