I prefer when market sentiment is at an extreme, either the crowd is very bullish or very bearish. The risk/reward for a contrary trade becomes very high at that point. That is the reason I was hoping for a move higher this week. I thought a move higher would push us to extreme optimism with a good overbought reading.
Unfortunately, the reality is that the market is muddling along and it does not look like we will get a good overbought reading or extreme optimism this week. This makes choosing a market direction much tougher. The market is in an uptrend so betting on a reversal without extreme optimism is a tough bet. At the same time I cannot bring myself to get on board with deteriorating fundamentals and so-so valuations. I am waiting for the bulls or bears to push this market too far in either direction.