The market is still lower so far today, pressured by a combination of spiking oil (+$3.50 to $65.5) and skittishness ahead of the FOMC meeting. PIMCO's Bill Gross said he thinks there is a chance that the Fed pauses tomorrow. But I am not so sure.
So market sentiment today is cautious, and so are the indicators that I follow. Some of the advisor surveys ticked higher (i.e.- more bullish), but are still off peak levels reached earlier this year. And the short interest indicators are still elevated.
- The bull/bear spread in the Investors' Intelligence survey rose to +26 (53% bulls, 27% bears)
- The bull/bear spread in the AAII survey rose to +22 (51% bulls, 29% bears)
- The Specialist Short Ratio is still very low at 0.17
- The Rydex Nova/Ursa ratio is also still low at 0.19
I am still focused on the large level of short interest in the market, despite the S&P 500 closing 8 points from a new high on Friday. While there could be some volatility around the FOMC meeting tomorrow, if the market breaks out to new highs this week or next, I would expect a flurry of short covering.