Weighing The Short and Intermediate Term

At the close the indicators have not changed much from this morning except that the put/call ratios have gotten a little closer to a buy signal. As I wrote this morning the indicators are mildly bullish in the short term but not table pounding bullish. From an anecdotal standpoint it doesn't seem anybody out there is bullish. In the short run that may be the best argument for a rally.

From an intermediate term perspective the weight of the evidence shows that investors are still positioned in an excessively bullish manner. The Investor's Intelligence survey has the number of bears below 20%. Short interest is hovering at multi year lows while margin lending is at multi year highs. Many famous managers have practically thrown in the towel on short selling. Portfolio manager and advisor surveys show that managers as a group are overweight stocks.

With intermediate term sentiment excessively bullish and seasonality negative it might take more to produce a rally than we recently have gotten used to. What we have not seen yet is a scary day with very heavy put buying and a lot of fear. We started seeing that late today and more of that tomorrow might finally get us lined up for a rally. Have a good night.

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