- Rydex traders have stayed begrudgingly bullish, even as many other sentiment indicators showed a move to bearishness. Late last week Rydex traders finally started backing off. They are not overly bearish but at least they have moved into neutral territory.
- The Investors Intelligence survey also finally showed a large drop in bulls. I prefer when all the sentiment indicators I look at are in unison and we are getting closer.
- We will once again have a weak oversold reading at the close tomorrow. The last weak oversold reading led to a 25 point bounce in the S&P 500.
- The put/call ratios have been giving a buy signal and continue to do so.
If the market struggles today and tomorrow I can imagine that sentiment will turn pretty gloomy and we might even see a pop in the VIX. Combined with the oversold reading that could lead to a decent rally. However, if the ticking time bomb known as Europe goes off than all bets are off.