Today is Thursday March 18th and the S&P futures ended the day flat, but the Dow outperforms for a change.

That is exactly what happened in today’s session the Dow was up 45 points, the S&P flat and the NASDAQ +2 points. The new numbers are out today on the Investors Intelligence market survey of newsletter writers and another week of increased sentiment by 1.2% to 46.1%. At the start of this rally it was in the mid 30’s area and a typical trigger point for a rally. The market has made it back up to its January highs and then some. At that time, the market sentiment for this timing tool was hitting close to the mid 50’s. A reading in this area, typically forecasts a market sell off and it did, just after the high in those numbers were posted. The point is, we are at a slightly higher high in price and the indicator is still 9% away from getting into the danger zone.

This indicator works in the opposite direction, as more professional newsletter writers become bullish, this will signal a top. I have been following this barometer or indicator since the mid 1980’s, a long time and I have seen it work what seems like magic over and over again at market extremes.

This is fitting since I have been talking about trading indicators the last few days. This is a different kind of overall market direction indicator for me anyway.

Back to the point at hand, if the market were to increase over the coming weeks this reading will then likely get to that over exuberance level of bullishness. The question is, how high will it go, before all of this happens. The possibility exists that the market sells off a little to let out a little of the mounting optimism. As day traders, we will just read the market for now.

The reason, stock market newsletter writers are really no better by and large than any one else when calling the market. The are overly bullish at market tops and extremely bearish at market bottoms. It is at those times that market goes the other way. Funny how that works.

Don’t be caught up in the emotion like most. It usually pays to think contrary to the conventional wisdom on the street.

I have a few charts below of yesterdays equity chart and today’s trades. I will have more to say tomorrow and will show today’s turning points in a Saturday post. Until then, “Trade on and be safe”.