PESSIMISM IS AT ITS HIGHEST POINT FOR 2012 ACCORDING TO ONE SHORT-TERM INDICATOR
I haven't talked sentiment in awhile mainly due to the fact that it doesn't work during bull markets. I abandoned sentiment surveys, put/call ratios and the like in early January and haven't looked back since. However, these types of short-term surveys of sentiment have some use.
The 2 day and 5 day moving averages of the combined put/call ratio hit its highest level of 2012 this week. The market should respond by continuing forward the remainder of this week. It may do it slowly...but it will do it.
Remember, if you are a bull, a low volatility, stable advance is ideal. If you are a bear you want shit to hit the fan as much as possible. Not in terms of news events or macro shakeups, but in terms of volatility and sloppy behavior.
There has been very little in terms of anything volatile or sloppy taking place in the market in 2012. As long as this landscape remains in place, the advance continues. It is as simple as that.
Here is the chart of the put/call with eloquent notes and elegant lines:
click chart to enlarge
