Trader Sentiment Wrong for a Top

Posted by Todd Market Forecast

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DOW  + 96 on 2000 net advances 

NASDAQ COMP+ 34 on 1300 net advances



  In this country, there is anticipation that on Wednesday the Fed will announce further easing either in the form of QE3 or an extension of operation twist. The latter is more likely and I believe that there could be some selling on the news.   A couple of elements were responsible for the uptrend on Tuesday. Firsts, there were some favorable developments out of Europe, chief among them a better than expected Spanish bond auction.

   If the Fed is inclined to move, they would most likely have to do so tomorrow. The election is looming and they don’t like to appear as if they are playing politics.

   If we do get a selloff, it would most likely be an opportunity to buy. Sentiment is wrong for a top. We are seeing a lot of pessimism on the part of traders. For instance, the CBOE put call ratio remains quite high.


TORONTO EXCHANGE:  Toronto was up a whopping 187. Good show.

GOLD: Gold finally had a down session, down $8 in spite of a weak dollar.

BONDS: Bonds were down again on Tuesday.

THE REST: The dollar was sharply lower, but this didn’t help gold and silver which were down. However, copper and crude oil were higher.


   Our intermediate term systems are on a buy signal.