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Weekly Sentiment Update – Traders Actually Look Bullish!

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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 into today's inauguration:

1) VIX Spread – Bullish

The 3-month VIX spread is at +5, which indicates traders are not concerned with volatility.

This is a bullish reading.

2) CNN Fear & Greed Index – Bullish

The Fear & Greed Index is at 67.

F&G operates on a 1-100 scale, and 67 indicates that traders are moderately bullish.

3) AAII Sentiment – Neutral

The latest AAII Sentiment Survey shows that 35.8% of individual investors are bullish, which is below the long-term average of 38.5%.

This is basically neutral.

4) CBOE Equity Put-Call – Bearish

The CBOE Equity-Put Call ratio is at 0.69 with a 3-day moving average of 0.73. This indicates higher-than-average bearishness.

5) ISE Sentiment – Bearish
The ISE Sentiment Index is at just 85 (85 calls for every 100 puts) this afternoon – which is a bearish reading.  And the 10-day moving average is 79.2.

This also indicates bearish sentiment.

Conclusion

Out of 5 sentiment indicators, we have 2 bullish, 1 neutral, and 2 bearish signs.

Now this seems neutral, but I'd argue that traders are actually leaning bullish.

Why?

Because options-based indicators (notably the ISE Sentiment Index) have become fairly detached from equity markets.

Using sentiment as a signal for buys/sells is often a bad idea. And in the case of these options indicators, they seem to be losing value as times go on.

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