Last update, I posted that a moderate bearish sentiment indicated a possible 4-5% rally into January and we got a 4% rally from SPX 2005 to 2082 then pulled back to 2044 to end the year. It is interesting that the year-end pullback lowered the bar for the "January indicator" where a positive first week and month indicates a positive year. Now this can be accomplished with closes over SPX 2045. I do expect a positive start to the year followed by a mid-month pullback, then a rally into the FOMC meeting Jan 27-8 with chatter about dovish language to make rate future hikes "data-dependent".
Sentiment charts for this week include SPXU/UPRO, Composite#2, and DUST/NUGT. I am starting to really like the short/long ETF indicators due to their effectiveness as well as simplicity and ease of understanding and will be adding several others in the next few weeks.
First the SPXU/UPRO ETF. Here, the bearish sentiment has fallen rapidly from a moderate bearish level (bullish) to an extremely low level (bearish).
.The Composite#2 (P/C,VXX Vol,VXV/VIX) has also shown a sharp decline in bearish sentiment, but not as extreme as the SPXU/UPRO ETF.
The DUST/NUGT sentiment indicator has shown the biggest surprise as bearish sentiment has fallen below the mean, indicating a weak sell signal.