The Investors Intelligence data is out and the bulls dropped to 36.7% while the bears jumped to 31.1%. The II data, in conjunction with the Rydex data shows that it did not take long for investors to become pessimistic again. This leads me to believe that the downside will be limited in the near term and that it will take a financial accident to take the market significantly lower in the near term.
This increases my conviction that a move lower over the next couple of days should be bought. It just seems less likely that we will get a meaningful move lower. This is a tough situation as sentiment indicators are supporting the market but the economy is deteriorating and stocks are not cheap.