A quick glance at the sentiment numbers illicits an “oh, shit”, response.
The NYSE Bullish Percent continues to fall and has now breached the 30% level, closing at 28% on Friday.
However, as can be seen from the chart, there is still more optimism, than the lows of November, when the Bullish Percent was an extremely oversold 4%. Is there more downside coming? This is one piece of the puzzle that might be confirming a resounding, “affirmative!”.
In addition, the S&P Bullish Percent and the Nasdaq Bullish Percent both hit sub-30% levels on Friday, and both are similar in that they are also indicating more optimism now than in November. But, have things really gotten any better to substantiate that? Uh, no.
The ratio of New Highs to New Lows is now sitting at only 6% for both the NYSE and Nasdaq, and that number has been steadily falling.
That said, with sentiment so negative, a possible bounce could be coming, at S&P 741-742.
Or, we could crash this week, as some might be thinking. However, there is always the possibility of a profitable Costanza trade were that to happen. So, get ready to play the bounce with a few of your shekels if the opportunity presents itself on a big down day this week.
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