Let me start with my favourite subject. Namely, the perma bears :-)
First, most of the Perma Bears we know of had sent warnings around the blogosphere since summer 2009. Yes this number is shocking and anyone interested can review their old articles since that very time. Prechter is one of them, but believe me there are more of the same kind.
Fact is that Perma Bears have constantly shorted the market even lately at low levels only to find out that even during a bear cycle decline that indices can rally strong. Bears tend to make viewers believe that shorting every day and stating being half short & half long at time turns into profits. Well, it is like a Casino playing Rouge & Noir at the same time. Let me tell you it does not work and will never work. Any decline in the market they call the end of the world and the current sentiment numbers are confirming it. I did not see any bear at break 1315 shouting the very same they do today nor did I see any bear shouting out loud when Silver was trading at 48-50 USD. I rather saw them in dispair and in close the trading account mode. This was the very same time to exit ! I refrain from re-posting my end of April Silver warning article. We also saw dispair and disbelief when S&P500 rallied before the FED Meeting to 1220 again and Bears shorting even more near the 1120 got hurt big time by the strong rally occured in just few days. Of course this is all forgotten and bears will tell us otherwise. Well, so be it.
Let us concentrate on some rather more interesting aspects.
First, we know the World will End Drama Queens are all over the blogosphere and news. We also know that the last 8 weeks the average bearish sentiment is well above 40%. Now we can add an ISE Sentiment of put holders not seen since early March 2009. We add this to the bear bragging and if we want to see the forest and not just the tree in front of us it becomes very clear what to do and NOT to do. I also can understand the bears as they need to reach a point of break even from all the shorts committed in past years. I like actually the fact the overconfidence amongst those perma bears. The more the better. It gives me rather a clear signal that we are approaching very soon one of an amazing buying opportunity.
SPX Monthly Chart
We are very close to the range of 1093-1097 in SPX being probably a good area to watch out!
SPX 2 Year Daily
The chart shows the most obvious but sometimes or often the most obvious is unhealthy
SPX 3 Year Daily Bull Count
With all these bearishness hovering over the markets this chart could make very much sense. We saw MACD as oversold as March 2009 and now we have those ISE numbers.
The in blue marked potential target area reflects a few retracement levels
a) 1103 being 38.2% from March 2009 low - May 2011 high.
b) 1120 & 1059 being 50% / 62% retracment from July 2009 low - May 2011 high
c) 61.8% level from May high in Monthly Chart being 1093-1096 range
All 3 are within the blue zone and buying slowly into those area is intermediate relevant or even long term. We have a 10% buying window !
SPX Daily Chart
We can clearly establish a 100 point range between 1220 - 1120. It goes without saying that whatever we break a sizable move will occur. The chart makes it very clear that shorting every day since early August would have not made any profits. 8% moves within this range would kill any short or long if the trader is bias towards one side of the coin.
VIX 3 Year Chart
I think there is no need to mention that a year after we hit a VIX of 50 range we see far higher prices. This message is for investors who are willing to hold a year and buy slowly into fear.
SPX Bull-Bear Indicator
The chart shows we are still in a bearish cycle and it should be treated as such. As said above, there is no need to rush and awaiting capitulation is the right thing to do by staying at the receiving end buying equities from the fearful investors. Special Alert Article once the time has come.
SPX Percentage of Stocks above 50/200 DMA Weekly
Obviously it shows when to start accumulating with a longer term view