Mixed Day for Stocks

The market rallied back a bit in the last half hour, enabling the indexes to finish up slightly for the day. Biotechs and energy were sold the hardest. Biotechs look like they are getting oversold, as a group, while energy looks like it is just profit taking.

The ISE Sentiment index has close above 195 for a third straight day. This is a big change of character for that index, and indicates the retail options players are favoring bullish call options right now.

These investors had been resistent to the recent rally most of the way up, so if they are now joining the party, it could be a sign that there isn't much ammo left to power the market further in the near term, and more of a correction is needed.

Now, I want to be the first to point out that forecasting any sort of correction has been a losing game so far this year. It could be that all of the potential negatives on the horizon are so well known, that they are already priced in.

Under this scenario, most investors would already have raised cash in advance of an expected pullback. But as the market continues higher, underperformance anxiety sets in, and money comes back off the sidelines.

I am sort of in the middle of the two camps right now, as I think we are overdue for a pullback, but I suspect it will be more shallow than most are looking for.