Update On The Negativity Bubble

Yesterday I penned a column for TheStreet.com on the negativity bubble, and how I felt Monday was likely the bottom for this decline. (I will post it on my blog tomorrow) No sooner did my post appear than the market swooned nearly 300 points.

Many readers asked me whether I had altered my stance? The answer is no, but felt a little silly for sticking my neck out. There will likely be many tests, but my thesis is that the negativity peaked on Monday, and future negative headlines will be less likely to result in new lows.

Additionally, there are a few datapoints I'd like to share that update my examples:

• The bears in this weeks Investor's Intelligence poll rose to 45%. That's the highest level since Sept. 98, eclipsing all readings during the 2000-02 bear market.
• The bears have outnumbered bulls in the AAII poll for 14 consecutive weeks. That ties the longest streak on record since 1990. The last one ended in Aug. 06, and preceded a huge rally.
• The 10-day ISEE Sentiment Index made a new record low yesterday, since its inception.
• Tuesday's rally was the 2nd 90% up day in a week; historically, this has been a very bullish signal

With the ag/energy/commodity complex getting taken out to the woodshed over the last few days, I am wondering where the leadership will come from in any new upleg. Tech is still the biggest lagging sector, so I am leaning toward this area for renewed strength.