Quick & Dirty Sentiment Update

Well I (volar) did not do a post last week, bc not much has changed. That being said, I have some charts for kicks and giggles.

Overall, my indicators still say there is room to run (especially breadth and sentiment). This bull market has been acting like a bull market. All that being said, I have a list of a few caveats worth mentioning.

First, RYDEX Levered Bull ETF assets/ Levered Bear ETF assets.

I admit this data is “new,” but either way the ratio of bull to bear assets is approaching a level in which the market did find “tipsy” in the past. Consider that after the flash crash about 50% of the levered Rydex funds were in Bull assets, now we are at 2x or 200%. Also, unless this ratio embeds, the move outside the bollinger band has also warranted caution.

Now here is the money flow into small cap growth ETFs:
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Clearly, that should warrant some caution. That was a big jump. Over time money is moving from MFs to ETFs, and that makes this hard to measure changes in sentiment. That being said, there was under $1 billion in growth and small cap funds before the Japan ordeal; there is $1.4 billion as of Friday. So money is flying here… we will find out what the COT and short interest is shortly.

Now a quick point or two on seasonality.

The holiday is generally good, but the 3rd week of July can be quite ugly- or at least the bullish seasonal support is not evident. The 2nd/3rd weeks of July/ week 29/30 are about 40% positive.

Also notice how the VIX tends to go higher from here.

Clearly the short Vega into the 4th worked well, but notice how the RED area for the 3rd week of July and the first few weeks of August is roughly > 20. That simply means that there is a relatively high probability the VIX is north of 20.

Bottom Line: still in a bull market, but there are some potential caveats. I will have some new stuff and some updates this week ranging from IWM & Russel Futures put call ratios to updated short interest data.

Best of luck trading,

-Volar