A week ago the indexes were at 2014 lows, seeking support from levels late last year. They had quick retreats from highs as large as 7%. After successfully testing the 27-January lows last Wednesday bargain hunters stepped in and two-days of sharp gains meant the averages all ended the week higher, with indicator charts also showing positive reversals from prior lows.
The advisor schedules meant many comments couldn’t include the late recovery. The result was another move away from bullishness that is positive for more market gains. The large market drop on 27-January contributed to another contraction for the bulls, ending at 41.8%, from 45.9% a week ago. The bulls have now fallen nearly 20% from the final reading of 2013. That showed the most optimism since October 2007, almost equaling that count of 62.0%. Bullish readings above 60% signal high risk. Now those conditions have been relieved with a reading slightly below the 45% level that is typical in a rising market. The lack of current optimism has to be considered positive for stocks, with the suggestion of lots of new money now on the sidelines.
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