Sentiment hit 72% at the close today, Friday. That means that almost 3 out of every 4
traders are betting that Tuesday (Monday's the holiday.) will be an up-day in the Guggenheim/Rydex funds
I follow. I track the “success” of these
trades and as of Thursday, traders were correct only 30% of the time over the
last month. That’s why sentiment tends
to be a counter indicator (extreme bullish values imply a negative outcome for
the market)…and it isn’t just the daily sentiment value.
The 5-day moving average of sentiment hit 71% at Friday’s
close. Going back 4-years I could only
find 1-day when sentiment got this high and that was after a bottom. (I was too lazy to open my archived files to
check this further back.)
Conclusion: This is looking more like a top.
