Back on March 12th I wrote about signs of ‘Selling Exhaustion‘ I was seeing…
The CNN ‘Fear and Freed Index‘ hit 1 today which is cray cray scared.
Finally, the Stocktwits sentiment also reached an extreme I have never seen tonight with what I call a social VIX reading of 2.5 (It has averaged between 4-7 for years and years and not something we publish but hopefully will someday soon). Stocktwits message volume also reached all-time highs today.
What a day of selling and fear and possibly greed (by the shortsellers).
Thank goodness it is Friday the 13th (The Dow has been down seven Friday’s in a row).
The market bottomed the following week and took off.
Flash forward to yesterday…
The last few days it feels like ‘Buying Exhaustion’ where the gap ups keep happening in stranger stocks and the chatter on Stocktwits streams of penny stock biotechs is to put it mildly’ frothy’. Over on Twitter I am getting Direct Messaged by friends that do not trade stocks about $1 biotech stocks. I am looking like the old grumpy man telling them to ignore penny stocks which than double the next day. Maybe this time it is different….??
The bullish to bearish sentiment is also back to the very high range. Master technician Helene Meisler tweeted the following:
This bullish sentiment is taking place with the S&P still trading below the 200-day moving average.
More evidence a halt in the rally may be due…
Hard to fight the fed, but the bank stocks seem to be trying hard.
These two charts says a lot about the new financial order of banking and money:
Notice in March of this year how Square and Paypal did a 180 and started moving higher as the banks just sat there. While I don’t think the banks need to rally hard for the current market rally to continue, it is starting to feel like the banks rolling over the last few days could bring the rest of the market down with it. I am watching this closely.
The second one is from JC showing the relative strength of technology stocks over financials:
This big trend will continue whether the market crashes tomorrow or continues to run, but even a titan of the hedge fund industry felt compelled to chime in yesterday:
Word out about 30 minutes after the close – hedge fund titan and former president of Duquesne Capital Stanley Druckenmiller, at the Economic Club of New York, commented:
The risk-reward for equity is maybe as bad as I’ve seen it in my career. The V-shaped recovery is a fantasy…
I’m not a scientist, I’m a common sense guy. I just don’t think you can take massive amounts of money and allocate capital to zombie companies. It just doesn’t make any sense to me.
Finally, cover your eyes if you hate looking at train wrecks but here is how the European banks look.
No wonder the money is fleeing Europe while it can looking for a home in US dollars and stocks.
I think you get my point. Let’s not be surprised if the market takes a breather and even rolls over.