The Sentiment Timing Index “timing profile” was very mixed for last week, and it has turned out be very volatile. Thursday’s big up day was completely reversed on Friday. This is all occurring within recent ranges but has an overall bearish cast, especially given the timing for eventual weakness until February
The best near term sentiment analysis is that the S&P had a notable failure from the 95% Bullish reading on 1/23 near 2062. Thursday’s sentiment was 88%, and that was enough bullish sentiment to see stocks fail again on Friday. The S&P has been bouncing from the 1990 area, which is obviously important for the bulls to defend.
A tight trading range continues and it would not be surprising, in time, if 1990 is broken and the December lows (1970ish) become a target. But, that trade won’t be actualized without a more defined breakdown. So, any way I look at it, this is still an inconclusive interim profile. Again, minor timing indicants suggest a day or two, or three, of sloppy recovery attempts. Try to enjoy the churn, and don’t be seduced into initiating any seriously sized positions.
Every trader wants to be in the “big move” and on the right side of the trade, but it can be just as important to know when there isn’t a high probability trading situation. Now is not the time to squander your trading capital and, as well, you’re psychological capital.
We are in one of those times where there is no real trading advantage to get aggressive on either side. We are, however, are approaching an important turn date at which the trend should hold until the next important Sentiment Timing date that comes due near the end of February.
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