I've learned to really dislike market days like today. NASDAQ up 43 points at one point, then... out of gas. I know the market finished higher on the day, yet still disappointing. A typical summer up day with little volume to convince me of the move either way. Fortunately, market action lately has shown a lack of selling conviction rather than a lack of buying conviction. I'm still optimistic, however, that this summer will not repeat that of 2008 and fall off a cliff in September. Investor sentiment has reached an extremely low level with negative news about the US economy outweighing anything else. Of course, this is a positive sign based on an intuitively contrarian view of the market.
http://www.market-harmonics.com/free-charts/sentiment/investors_intelligence.htm
As shown in the sentiment charts found above, the bull/bear spread bounced of zero 2 weeks ago and is trending higher. With the VIX desperately trying to hold its 200-day MA it is clear that the bears are struggling. Given the fact that we are in a mid-term election year, I would imagine that most of the "smart" fund managers are waiting for the market to retest or make new lows in Sept before adding to any positions. Since this is the obvious move, I think the market will outsmart the seasonal, presidential cycle guys and continue to bore investors by continuing to grind higher on lower volume for the rest of the summer.
