Is Bearish Sentiment High Enough?

Is Bearish Sentiment High Enough?

Bull and bear , symbolic beasts of market trend. The stock market started the week under heavy selling pressure as the major averages gapped lower on Monday. In the first hour of trading the Nasdaq 100 Index ($NDX) was down 2. 7% but ended the day higher. Even though the S&P 500 did not close higher Monday all the market averages moved higher through Wednesday's close as even the CPI report did not negate the positive momentum. As the excellent chart from AdvisorPerspectives illustrates the markets trend change early Thursday. While the 0. 2% December increase in the Producer Price Index was lower than expected the yearly gain of 9. 7% was the highest on record. The S&P 500 Index ($SPX) traded higher in Thursday's first hour, the sellers quickly took over as it closed down 1. 42% for the day. Both the $SPX and $NDX traded lower until mid-day Friday before rebounding in the afternoon as both closed higher with the $NDX up 0. 75%. The $NDX did manage to close up 0. 1% for the week. This was in contrast to the 0. 9% decline in the Dow Jones Industrial Average and the drop of 0. 3% in