Interesting commentary released by a few brokers in recent days regarding current sentiment levels in the market, although it has to be said with a US bias. It seems that sentiment indicators have had a further modest shift away from the optimism that accompanied the 14-Sep highs in the US & UK.
The bulls dropped to 41.5% from 42.6% a week ago. That is down 12.7% from 54.2%, achieved mid-Sep. Bullish levels of 55% and higher often coincide with market tops. Meanwhile, there has been no recovery in optimism by the advisors. Many pointed out ongoing technical divergences such as the failure of new stock highs to match the level shown with the first index peak. The current readings are not significant but the direction is enough to increase the bull-bear spread further. That will eventually produce attractive buying levels.
I personally like the Put Call ratio in the US – this has an almost infallible record of finding short term bottoms in the market – not necessarily to the day, but certainly within a percent or two of a bottom and generally a couple of days notice.
Take a look at the chart below which, together with the current oversold readings on the 2 & 4 hour charts for both the US & UK, lead meto personally think that we are within a day or two of the commencement of an upswing that will take us, finally, over 6000 on the FTSE 100 in the run upto Xmas.