The SPX has started 2016 crushing the bulls. It was the worst start to a year in history as a matter of fact. But if you have a television-radio or newspaper, that should not be a surprise to you. It is hard to find anybody head who is bullish on the stock market right now. Which should not be a surprise either, because they have a “herd” mentality.
When the SPX was trading at new all-time highs, there were not a lot of traders/investors that expected the stock market to go lower. Why? Because it was going higher at the time. Trader’s psychology is like a “herd of cattle”. They move in the same direction-think the same and don’t switch sides until the entire herd is switching sides. This has led many to look at 2015 as one of the worst trading years many have ever seen. (There are a lot of traders who have never seen a “not trending market”)
What does this have to do with “the time to panic is now?”
The time to panic is not now!! Woody Dorsey has a technical turn date set for 1/10/16, which was last night. The SPX futures opened -20 and by the time the cash markets opened, were +10. His Sentiment data has triggered 3 sub 5% readings, which is telling us EVERYONE is bearish on the stock market. Take the non “herd” approach and expect all of these shorts to get squeezed in the coming days.
How high can the SPX go? I would not count out above 2000, nor would I count out 2040+-. Once you see the talking heads getting bullish again, watch what the “herd” is feeling (investor sentiment) once they start becoming bullish again-then you need to start panicking! Because the lows aren’t in yet—just for now they are approaching.
We are holding a free webinar on Wednesday 01/13/16 at 2:00 pm where Woody Dorsey and I will be going over how to use investor sentiment to put the odds on your side-when making trades. There is limited seating and you can register here.