Weekly Sentiment Update: Back to Neutral That Fast?

March 10, 2017
/ By Michael Comeau

Permabulls always say everyone's bearish.

And permabears always say everyone's bullish.

But let's look at the actual numbers to see how the crowd actually feels.

Last week, we saw sentiment climb to frothy territory.

Now, let's see if anything's changed now that we're seeing some signs of deterioration, most notably the relative weakness in the Russell 2000.

1) VIX Spread – Bullish

The 3-month VIX spread is at +3.96, which indicates traders are still not concerned with volatility.

This is a bullish reading.

2) CNN Fear & Greed Index – Bullish

The Fear & Greed Index is at 66, down from 81 last week.

F&G operates on a 1-100 scale, and 66 indicates moderate greed.

3) AAII Sentiment – Bearish

The latest AAII Sentiment Survey shows that 30.0% of individual investors are bullish, which is well below the long-term average of 38.5%. It's also slightly down from last week, which is a surprise to me.

Bullish AAII Sentiment has been below the long-term average for 7 of the past 8 weeks.

4) CBOE Equity Put-Call – Neutral

The CBOE Equity-Put Call ratio was at 0.72 yesterday, which is a 2 week high. The 3-day moving average is 0.63. This is basically neutral.

5) ISE Sentiment – Neutral

The ISE Sentiment Index is currently at 112 (112 calls for every 100 puts) at yesterday's close, which is a bullish reading. And the 10-day moving average is 84.1.

Even though the 10-day moving average indicates high demand for puts relative to calls, I'll call this neutral because it's moved up quite a bit, and for the past year or so, the number seems to be perpetually low. In fact, I may have to boot it from these Weekly Sentiment Updates.

Conclusion

Out of 5 sentiment indicators, we have 2 bullish, 2 neutral, and 2 bearish.

So after two weeks of undeniably bullish readings, traders are back in neutral territory.

It's not exciting… but it's the truth.

Weekly Sentiment Update: Back to Neutral That Fast?

Leave a Comment:

Popular posts

Sami’s Swing Trading Blueprint: April 29, 2018

How to Use the VIX Curve to Judge the Market’s Mood

What’s On Tap for Traders: April 24-29

Scott Redler: 10 Trading Rules I’ll Teach My Son