As I survey the landscape of sentiment indicators, I have to note a distinct dearth of bears.

On June 4th $RUT reached a 2012 closing low of 737.24.  That week’s Investor’s Intelligence % of bears was 26.6%.  Since then the II % of bears has been in a range between 24.5% and 27.7%.  Going back to 2004, the average % of bears in the weekly II reports has been 27.8% with a standard deviation of 7.7%.  Per II, sentiment isn’t considered bearish until the % of bears exceeds 50%.  Coincidentally, the reading for % bears this week was the same 26.6% that it was at the recent $RUT low.

Since that June 4th low in $RUT, the weekly NAAIM % has steadily risen from a reading of 49% then to 76% in the most recent report.  Since early June, the “professional” money has pretty consistently been putting money to work in this market.  The 49% level cannot be considered bearish since the average going back to 2006 has been 51% with a standard deviation of 23%.  This week’s reading is now more than 1 standard deviation above the mean.

The CBOE Equity Only Put/Call Ratio is currently 0.69 as of today’s close.  Since the June 4th low in $RUT, there have been 52 trading sessions and only 5 of those sessions have seen the CBOE Equity Only Put/Call Ratio close higher than 0.80.  Since 2003 the average daily value of the ratio has been 0.66 with a standard deviation of 0.09.

Last but not least is $VIX.  Going back to 1990 the average daily closing value of $VIX has been 20.52 with a standard deviation of 8.18.  We are now getting close to 1 standard deviation below the mean.

If $RUT is up going into tomorrow’s close I will scale out of some of my legacy URTY position and use a small portion of the proceeds to average down my TZA position.  Many of the indicators I follow are showing signs of a top in stocks; the lack of any real rather than imagined bearishness out there, the NYSE ARMS index closing today almost 1.5 standard deviations above it’s mean value going back to 1995, $RUT stochastics are approaching overbought while $RUT is in a downtrend and the % of Nasdaq Composite stocks above their 50-day moving average nearing 1 standard deviation above the 3-year mean value to name just some.  Any further upside in $RUT favors a high probability bet on a pullback.  The only question in my mind is whether this apex in $RUT is a top or the top.