Were AAII & II right? [w/ edit]

Two extreme sentiment indicators said ‘rally’

[edit] Okay man who stares at chart, make a post in pre-market and see the thing reverse at open. NQ chart below is still above the dashed (tentative) support line and should hold that to keep the theme in play.

NFTRH 702 reviewed the bearish weekly charts of the main US stock market indexes. It’s not that I wanted them to be bearish or was projecting a biased view. They were rolling over and bearish. Period.

Here is one of them, the Nasdaq 100, still in roll over mode as it dropped, rallied as expected in March with the terrorized sentiment backdrop and failed at the weekly EMA 30 (green). Classic failure with RSI and MACD still in the red.

But in the Market Sentiment segment, which included some middling indicators and a couple of extreme over-bearish ones (AAII & Investors Intelligence) this funny little daily chart sketch of NDX was included so that we could be open minded about the market’s potential for another rally out of over-bearish sentiment. So in a contrary way, we opened the possibility that these over-bearish indicators were ‘right’ (err, wrong).

It’s just a product of…

…seeing a potential pattern that could develop to mess with the bearish side of the boat.

This morning the NQ (futures) is furthering the theme. Per the NFTRH Trade Log I added QQQ on Monday to test out this theme and so far, so good. It could just be a bounce pattern within a new bear market but if it were to somehow take out the SMA 200, which is roughly acting as the pattern’s neckline it could really mess with the bear case for an extended period. For now I’ll call it a bounce.

nq

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