Sentiment Indicators Inconclusive at This Point

Tuesday, 22 Oct 2013 07:44 AM

By Rick Pendergraft

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Even though the government shutdown ended last week, the remnants are still lingering when it comes to reading the sentiment toward the market.

For the third straight week the Commodity Futures Trading Commission was unable to issue a Commitment of Traders report due to the shutdown, so it is still impossible to know for sure what is going on in the futures markets — that goes for commodity, stock index and Treasury futures.

Even the three main indicators I watch for the stock market are still not quite right. For instance, the Investors Intelligence Ratio for last week fell from 2.204 to 1.972, with the bullish percentage falling and the bearish percentage increasing.

Unfortunately, this doesn't tell the whole story, as the survey was taken before the deal was completed to end the shutdown and to raise the debt ceiling. So this week's survey will give us a much better read on the indicator.

The CBOE Volatility Index (VIX) has been incredibly volatile over the past month. In mid-September the indicator was hovering around the 13 level, but then it jumped all the way up above 21 on Oct. 9. With the market rallying over 5 percent in the last eight trading days, the VIX has fallen all the way back down to the 13 level.

Over the next few weeks, the sentiment indicators should get back to normal, and this should give us a better idea of how bullish or bearish investors are at this time.

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