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Weekly Sentiment Update: The Broken Permabear Clock Is Finally Right!

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Permabulls always say everyone's bearish.

And permabears always say everyone's bullish.

Neither side provides evidence for their views.

So let's see how traders are feeling after what may have been a change in complexion yesterday.

With hot momentum stocks like NVIDIA (NVDA) and Tesla (TSLA) taking beatings, let's measure the market's mood for insights on where things may go:

1) VIX Spread – Bullish

The VIX is ticking up, but the 3-month VIX spread is at +3.83, 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 75.

F&G operates on a 1-100 scale, and 75 is in extreme greed territory.

3) AAII Sentiment – Neutral

The latest AAII Sentiment Survey shows that 38.5% of individual investors are bullish, which is right in-line with the long-term average of 38.5%.

This is Neutral.

4) CBOE Equity Put-Call – Bullish

The CBOE Equity-Put Call ratio is at 0.62 with a 3-day moving average of 0.61. This indicates higher-than-average bullishness.

5) ISE Sentiment – Bearish

The ISE Sentiment Index is at just 92 (92 calls for every 100 puts) this afternoon – which is a bearish reading.  And the 10-day moving average is 81.3.

This also indicates bearish sentiment.

Conclusion

Out of 5 sentiment indicators, we have 3 bullish, 1 neutral, and 1 bearish.

Plus, keep in mind that the ISE Sentiment Index seems to always read bearish no matter what's going on in the market. So that 1 bearish indicator doesn't count for much.

So just as a broken clock is right twice a day, the permabears are now right: traders are indeed very bullish right now.

And when bullish sentiment meets stretched technicals, the bears tend to have a better chance at mounting successful attacks.

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