08/15/2014

The summer swoon. That time of the year when we traditionally see a bit of a pullback in the major indices. We were ready for it. People called for the correction. And then it happened. And then it was over. Just like that. Over. That’s a lot of short sentences but it goes to point out just how quickly the swoon/correction/pullback actually lasted. We bottomed out on sentiment two weeks ago, hitting the fear and greed year low of 4, the year high bear sentiment in the AAII, and a 60% increase in the VIX, and since then everything has come up roses. Each day this week we have seen the fear and greed tick a little bit higher and the VIX fall a little more. A good earnings season is all but over, geo-political events have cooled down, and the bulls have absolutely refused to give any ground. This morning (I’m writing this a little bit later than usual) we have already seen a great open in the S&P, topping 1,960 and still climbing, crossing back over its 50-day moving average. The only dark lining that I can see is that volume remains low giving just enough reason to think that we may not be out of the woods yet. But until then….