The most accurate measure of Stock Market Sentiment is the Daily Index Sentiment©

Published here by the W. B. Busin Group.

May 15, 2009   2200 ET  - 

Market sentiment continues in neutral allowing for a potential down trend, or a lateral corrective to continue.

May 14, 2009   2200 ET  - 

Market Sentiment point to a reach back to the Bearish zone for tomorrow's action.  These two stock market sentiments reflect the dip buyers are coming into buy the indexes when any support is touched, tested and then held.

This type of market sentiment and price action in corrective phase is potentially quite bullish over the next 10 trading sessions. 

May 13, 2009   1900 ET  -  (updated early due to traveling)

Market sentiment reach toward the 20 level continues and will likely touch or break that level in tomorrow's session.  Price and volume do not have to do much more than trade within this range or a wee bit lower to break into bullish zones.

May 12, 2009   2200 ET  -

From yesterday,

"So, we expect the moderation of the extreme into the neutral zone to hold for this expiration week.  A bounce for sentiments and index prices to bring them closer together in the neutral zone."

The correction of the extremely high sentiment is likely to foster a resumption of the upward move.  Sentiments will likely rise and fall within the neutral zone for several sessions.

May 11, 2009   2200 ET  -

Look below at Friday, May 8th, our market sentiment comment.  The sensitivity showed itself today as we stated, and, the plunge of sentiments here appears dramatic.  But we have seen this same action/reaction many times before. 

So, we expect the moderation of the extreme into the neutral zone to hold for this expiration week.  A bounce for sentiments and index prices to bring them closer together in the neutral zone.

We have added the 'expanded' 40-day view of the Daily Index Sentiment for clarity.

Also, on the historical page, the year of 2008 is covered in full.

May 08, 2009   2200 ET  -

This is an extreme in sentiment and some of our quite sensitive sentiments are even at an extreme of the extreme.  Sentiment extremes are not signs of an impending crash, but they are easily neutralized by a session or two of declines of price and bearish volume patterns.

Next week will be interesting.

May 07, 2009   2200 ET  -

Is the beast dead or dying?  No, but a correction is coming - either downward or lateral.  Look at the similar cluster at the left of the graph.  It was the Obama exuberance spike for price and sentiments. 

We are short here but will dance to the music that the Market's Symphony plays.  It may not take more than a session for the decrescendo of prices and bullishness to turn.

Once again, if long, why not take a profit.  Caution!

May 06, 2009   2200 ET  -

Sentiments are reaching some limits while the volume consumed to move an index higher by an increment is pointing to a blowoff style rally that reverses lower, either intraday or the following session.

It may begin after Thursday's data releases.

So we again repeat, if long, why not take a profit.  Caution!

May 05, 2009   2200 ET  -

The action today in the indexes is not encouraging or should not be encouraging to the bullish.  We view this action as quite bearish and with extreme caution for the long side traders and investors.  We expect a possible turn downward within the next 12-15 RTH trading hours.

The "buy the dip" runup from the March lows shows exhaustion and coupled with our timing dates (proprietary and only for our subscribers), we are confident that a break is likely to begin quite soon.  ETF traders and option traders will do well to pause and wait for the break. 

The sentiments here will show an initial break downward and then likely level off in the neutral zone, as the dip buyers step back in to catch the "bargains" they missed on this run upwards.  The crushing will likely take a few weeks to develop but it will come. 

We are turning short term bearish.  And, if what we expect does develop in the next 8-10 trading sessions, we will be bearish for the next 3-5 months for all indexes we track and trade (SPX, Dow, NDX and RUT).  Yes, that is a view of a retest of the lows in a worst case scenario.  Best case scenario runs toward a lateral chop with some quite volatile moves, but remaining or attempting to hold above the SPX 780 level.

If SPX reaches above closing 950 for 2 or more sessions, we will reconsider the intermediate term scenario.  But SPX 945-950 is clearing of the January 2009 high that may set up further upside. 

We would prefer to have a small 10%+/- corrective now, and then move higher into summer.  But the distribution patterns and volume patterns are quite a focus with us at this time.

So our view and message is caution!

May 4, 2009   2200 ET  -

The "bend to 45" of the market sentiment indicators while price spikes, frequently precedes a reversal of at least one trading session.  The bending to 45 degrees occurs at bearish levels and bullish levels.

The recent few sessions have been impacted by volume declines increasing the sensitivity of the stock market sentiment indicators and technical indicators.  Low volume on the rally, sentiments in bearish zone, momentum indicators at bearish levels are flagging a potential correction.

Although the excitement for today's action may be surprising to some, we expect that price correction at this time may be quite bullish for the next several weeks.

So we shall see how this scenario develops.

May 01, 2009   2200 ET  - (NYA rescaled)

The closing price spike in a low volume session brings April trading to an end with Dow 600 points higher and the SPX 80 points clear of the March close.  As you can see the market sentiment for the indexes has remained in the neutral zone scoring only sell signals.  The underlying character of this persistent high level of stock market sentiment may simply reflect bullishness of the projected bear market rally.

We lean toward the bullish camp as the higher highs and higher lows continue to pile up on the bears.  This type of action can be seen in several reaction bounces and bull moves over the past decade or two (1999, 2002, 2003).  As the old saying points out, "if you are bearish, the market can stay overbought a lot longer than you can stay solvent."