Sentiment still seems to be too bearish. Rydex traders have barely budged and neither have newsletters. From Marketwatch:
Consider the average recommended equity exposure among a subset of short-term stock market timers tracked by the Hulbert Financial Digest (as measured by the Hulbert Stock Newsletter Sentiment Index, or HSNSI). As of the close on Friday, July 2, this average stood at minus 1.8% -- which meant that these short-term market timers on average were completely out of any long positions and allocating 1.8% of their equity portfolios to going short.
As of the close on Friday, July 9, one week later, with the Dow 512 points higher, the HSNSI stood at minus 6.5%, or some five percentage points lower.
In other words, the average short-term market timer reacted to this 512-point rally by becoming even more short the market than he was before the rally started.