During the past few weeks, the main sentiment indicators that I watch as overall market indicators have become stagnant.
The AAII Sentiment Survey ratio had moved up to 1.88 at the end of February, but has fallen back down to 1.09 this past week. The four-week moving average dropped to 1.39, but the moving average has been caught in a range between 1.2 and 1.7 for the past month and a half.
The 21-day moving average on the CBOE Equity Put/Call Ratio has been between 0.577 and 0.603 since Feb. 5, suggesting that option traders are comfortable with their current long/short distribution.
The CBOE Volatility Index (VIX) had jumped to 21 back in early February, but since Feb. 6, all but two days have seen the indicator close between 13.50 and 16.
Perhaps this explains the recent pattern in the S&P 500. During the last four weeks we have seen a week of gains followed by a week of losses, followed by gains, followed by losses.
Neither the bulls nor the bears seem to be able to gain any traction at this point. This could change later this week when the employment numbers come out and then next week the earnings season will kick off.
While the market and the sentiment indicators have been stagnant during the past month, I don't see that continuing past this week.
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