Newsletter writers are as bearish as they have been since the bull market started in 2009. According to SentimenTrader.com they are recommending a nearly 20% net short position. In the Nasdaq they are even more extreme, recommending a net short of 47.1%. This is the lowest reading since the Fall of 2010. Most evidence points to excess bearishness but Rydex traders refuse to fall into place and remain stubbornly bullish.
There were some signs of downside exhaustion in yesterday's markets. Treasuries were no longer able to rally and new lows contracted on a down day. I believe the weight of the evidence now points to excess bearishness. The economic woes are well known and "what everybody knows is not worth knowing" when it comes to the market. I expect a rally.