Sentiment Shifting

I have mentioned many times that some of the strongest bounces/rallies you'll see will be during a bear market/downtrend, there's a reason for this and that's all about psychology. Technical Analysis tend to take the humanity out of the market and whether machine or trader, they are both driven by human emotions such as the programmer of the machine.

I have talked a lot this year about why counter tend bounces in a downtrend NEED to be impressive and they usually are very impressive. There's a logistical reason for that. Yesterday I said the SPX-50 day moving average needed to be broken on the upside before we''ll get that change in sentiment and the market will entice longs who have been on the sidelines to feel like they are missing the train and stat chasing higher prices, this is what the pros need logistically because of position sizes. Today as the SPX breaks above the 50-day, the Dow over the psychological $18k level and the NASDAQ already above the Psychological $5k level, it seems sentiment is shifting as such a bounce is designed to do, it's not about oversold right now or anything like that.

This is a sentiment report with some example posts from the StockTwits, I imagine them like the Minions.

"A "potential level" is now cultivating to become a primary-term uptrend $SPY"

"$SPX daily MCAD bullish crossover on the daily."

" bias is to continue to hold... add in newer/higher cash areas..."

"perfect bull bar after being up lot plus vol surge so may pullback here which likely would be bought $SPY $SPX $ES_F"

We would not have heard comments like this last week so the move is doing what it's designed to do. In the end the basic concept is that the pro traders are able to offload large positions to dumb money at excellent prices leaving dumb money holding the bag and/or it allows them to open large short positions in to dumb money demand for higher prices. This is why the 50-day SPX break higher was so important, otherwise it was a mediocre move that didn't set off alerts and trading systems.

A lot of the time your own emotions are one of the best inverse barometers. If you feel scared to short in to a bounce/higher prices, knowing what most of you now know, then the market has done its job.