Sentiment Review

Most of the sentiment indicators I follow showed improvement this week, in that they revealed a decrease in bullishness. This is good, from a contrarian perspective, because if everyone is bullish it usually means the market is near a short-term top.

Here is a look at where some of these indicators stand:

• All 3 bull/bear surveys I follow (Investor's Intelligence, AAII, and Market Vane) showed lower levels of bullishness. The bull/bear spread on the AAII survey actually fell to -3%
• The Rydex Nova/Ursa ratio is still low at 0.22
• The 10-day put/call ratio has moved back into moderate territory at 0.83

The big drop in bulls on AAII, and corresponding spike in bears, shows how skittish most of these bulls really are. Only 2 weeks ago this spread stood at +40. That's a great deal of volatility.

On the technical side, the SPX had a solid week. On Friday, the NYSE registered 402 net new highs. This is the highest number since last July, and indicative of broadening leadership in the market. That means there are more candidates breaking out to new highs, which is where we should be looking for new market leaders.

Good luck this week. And thanks for reading--