I posted the spread of Investors Intelligence yesterday, which is at a 30 year extreme, at 49.1%. It did not raise any eyebrows !
Mark, who i consider a market sentiment expert brushed it off as less important, as other factors are driving this rally. Fib another savvy technician believes that the liquidity trumps the sentiment measure even if it's a 30 year high !. Da_cheif another savvy technician, considers the 30 year high as normal but instead tries to focus on the AAII, which is more in line with his epicenter theory. These folks could be right. But when you see a savvy group of professionals saying "This time is different and hence different factors are in play", it raises red flags.
Now i am in no way comparing the current market to 1987 or any other period as i believe each market environment is unique. Besides being a price follower i am only worried about the present and will not let anything else which has implications only in the future, to obstruct my present trading. Besides a whole lot of technical damage happens before a major price correction. Firstly you need a simple 8 x 34 cross on hourly before even getting mildly worried. This follows by a break of daily pivots and the 3 week / 4 week lows. Then the monthly 5 ATR gives way, which is the precursor to the final collapse. Hell, that takes a lot of time and would give the smart folks to exit the market.
But if you start seeing persistent price weakness in the context of the "conditioning" that in place with the pros today, you better get really worried.
Even more interesting was Prechter's interview that da_cheif posted. When the host asked Prechter what his downside projections would be, he refused to answer. This coming from a perma-bear who would in a heartbeat talk about 90% declines and DOW 400. He refused to throw a number. That is classic capitulation.
I can imagine the kind of capitulation from various quarters if the market were to advance another 200-300 SPX points from here.
When the amateurs post bold crash calls based on hindenberg, gann turn, sentiment, war blah blah blah, it's a wall of worry. When the experts get conditioned to ignore the warnings and believe in a new normal, that's when the market gets them.
Edited by NAV, 02 November 2017 - 06:22 AM.