After seeing the sentiment indicators shift off their bullish extremes thanks to the pullback in May and June, the rally over the last four weeks has moved them right back to the overly optimistic readings they were at before the pullback.
The Investors Intelligence Ratio jumped to 2.631 last week, which is the same reading we saw on May 29, and the bullish percentage jumped back above 50 percent. The bullish percentage came in at 52.1 percent, while the bearish percentage came in at 19.8 percent.
The 21-day moving average on the CBOE Put/Call Ratio dropped to 0.6095, the lowest reading since June 10. The daily reading from this past Thursday was 0.496, which is only the second daily reading below 0.5 since the beginning of the year.
Finally, the CBOE Volatility Index dropped back below the 13 level for the first time since mid-May.
The Standard & Poor's 500 keeps moving higher, but for how long? We are seeing new record highs every time it goes up. But what concerns me is that we saw several big companies miss on their earnings estimates last week (eBay, Google, Intel and Microsoft) yet the market still moved higher.
Are we reaching irrationality in the stock market again?
© 2015 Newsmax Finance. All rights reserved.