Sentiment

I want to thank so many of you for doing things I don't have time to do, monitoring retail sentiment through the groups and Twitter/StockTwits, give me a head's up to an interesting stock, etc.

One of the most active contributors of sentiment information is Sam for Canada (Eh?)  who has done an amazing job sending me the actual posts from mini-leaders i the twitter community and examples of the overwhelming tone.

The overwhelming tone today is not surprising, it is VERY bearish from retail's perspective. If I posted half of what Sam sent in, I'd have a 3 page post here. The point is, this is good, it's exactly what we expected. I expected certain moves by Wall Street to be facilitated by retail positioning and certain moves by retail to be facilitated by Wall Street's actions.

As to be a bit more clear, here are a couple of real life possibilities.

Retail has a lot of reasons to want to be short here. The truth is there's so much data in the market that anyone can justify any position they want to take, this is why objective analysis is so important and requires that you check yourself often to make sure you are not goal-seeking data, this is a good reason why I don't listen to CNBC, I never have it on, except when I want to hear the F_O_M_C statements.

If we stick with last night's analysis of a short term pullback or market correction, this facilitates retail entering short positions for 1 simple reason, they love price confirmation, they'd rather chase price lower and have that confirmation than enter closer to a reasonable stop. A short term market pullback gives shorts that opportunity to fill up short.

Wall St. needs retail to be short, why? If we are to get an unreasonably large move to the upside which Wall Street can use for exiting long exposure, entering short positions, etc. They'll need to see a short squeeze, otherwise they have to invest money in puts and stocks , etc to create an image that creates the same outcome, why pay for it when you  can have retail do it for you.

One other example is on a short squeeze, Wall St. moves tend to be very strong, emotional, convincing and can turn even the most level-headed trader with tons of objective data in to an emotional basket case making all decisions on an emotional, subjective basis. With this kind of strong move along with some other things that have happened this week (the very strong move up is not there yet, but started), Wall St. can change sentiment from bearish to bullish, retail is very fickle and will switch opinions in a day if the move is convincing enough. 

Now we have retail believing the market is going up because it has already made this spectacular move, everyone following objective data knows this isn't true, but we are talking about emotion, not objectivity.

Once retail buys it, literally and prices start to come down, retail is at a loss and again emotional. This creates a snow ball effect of selling that drops the market so fast it can make your head spin and it can make Wall St. a lot of money with really no investment to speak of in creating the catalyst.

So we have a few questions, but it doesn't change much. I'll try to give you a clearer picture and probabilities.