Looking At The Sentiment Indicators

There are several sentiment indicators that are lining up for a bottom. The put/call ratios have been showing extreme pessimism as has the AAII survey. Hulbert newsletter writers are recommending short positions on the major averages. Yesterday, the NAAIM indicator moved into extreme pessimism territory as well. From the NAAIM:

Unfortunately two of my favorite indicators have been holdouts, Investors Intelligence and Rydex. Both have shown improvements since late March but are not at points that are consistent with major bottoms.

At every major bottom and top one can always find one or two indicators that are not lining up. With that said its difficult for me to write off two of my favorite indicators. The totality of the sentiment indicators lead me to believe that we are in the late innings of this correction but I would not be surprised if there is one more push lower. If we do get another push lower I believe it could be bought.

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