Now that the dust has settled from the government shutdown and the deal to raise the debt ceiling, we got a better look at the sentiment indicators this past week.
What we found out is that investors are extremely bullish according on two of the main sentiment indicators.
The first indicator that stood out was the Investors Intelligence ratio. Last week's report showed a huge jump in the number of bullish newsletter publishers.
In fact, I don't ever remember seeing a bigger jump in the bullish percentage in the approximately 12 years I have been following the indicator. What we saw was a jump in the bullish percentage from 42.6 percent to 49.5 percent.
With a dip in the bearish percentage from 21.6 percent to 18.5 percent, this caused the ratio of bulls to bears to jump from 1.972 to 2.676. What these numbers also tell us is that the majority of the gains on the bullish percentage came from the neutral camp.
The second indicator showing extreme bullish sentiment is the CBOE Volatility Index (VIX).
The VIX has settled into a range between 12 and 13 since the deal was announced, and this is a sign that investors are content.
With Wednesday being a huge day for economic news (GDP, Federal Open Market Committee announcement and ADP Employment report), I expect a much more volatile market and with the sentiment so decidedly bullish, we could see some selling pressure.
© 2016 Newsmax Finance. All rights reserved.