During the past week, the CBOE Volatility Index dropped below the 12 level before closing above it for the week.
Last week's dip below 12 was the fourth one in the last year. To see as many dips below 12 as we have seen in the past year, you would have to go back to the 2006-07 timeframe.
I don't think I have to remind you of how the market performed following this prolonged period of low volatility.
Another indicator that continues to hover at concerning levels is the CBOE Equity Put/Call Ratio.
The 21-day moving average came in at 0.5262 to end last week, the 14th straight daily reading below the 0.55 level. The last time we saw a longer streak of readings below 0.55 was from December 2010 through February 2011.
From February 2011 through the late summer and fall of that year, the S&P 500 lost well over 15 percent.
There is another factor about the market that is concerning me right now besides the extreme bullish readings from the sentiment indicators — the number of earnings disappointments and warnings we are seeing early in the earnings season.
The last time I remember seeing a bull market with earnings warnings was in the fall of 2000.
I don't think I need to remind anyone what happened during the next few years after that period.
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