Simpler Sentiment – Weekly Wrap-Up 1/20/17

Well, Donald Trump is now President Trump. The DOW still hasn’t broken 20,000. And volatility has all but disappeared.

The S&P 500 is up 4 points on the day, seeing some volatility today with the inauguration, but not much at overall. It is down 6 points on the week, but less than a point off where we opened the week. The 20 day historical volatility of the SPX is down to 6 percent and the 10 day reading is below 5 percent.

That comes with the VIX at 12.24, up almost 10 percent on the week. The VXST goes into the weekend at 11.12. Volatility will come back to this market sometime in the near future, it just remains to be seen if it is to the upside or down.

The exception is the Nasdaq 100, which has put in new intraday all-time highs both yesterday and again today.

Our Market Barometer was slightly bullish at the start of the shortened week, and now the traders have a broader array of views going forward.

See John’s comments here in Bloomberg:https://newsletters.briefs.bloomberg.com/document/8FqoDXtlp3K8i7ulZqzudQ–_34z1xi252yhzuuv0g8/qampa-john-carter

Chris: I think the market loses ground in the last hour. I think that bleeds into next week.

Henry: There is some timing in the indexes for a potential high, but I feel like when your neighbor starts asking you about SPX timing…it probably isn’t going to work. The StockTwits sentiment and $PCVA (Put/Call Ratio) also lean towards the public having a bearish take, so I’ll stick with bullish to neutral until it breaks.

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SPY Sentiment 1/20/17

Bruce: “I have been neutral during the consolidation the last 6 weeks and cautious into the Inauguration, however I am seeing too much bearish sentiment and when everyone expects the market to go down, it usually does the opposite. I am starting to lean bullish.”
David: For several weeks the picture has been the same. We have been expecting the S&P 500 to take its next leg up to new all-time highs from this general area, while noting that timing that move and interpreting the short-term action was difficult. The intraday trading has been tough during that period. As of Friday morning, we might actually see that next leg starting but given the chop we’ve seen it’s hard to have too much confidence that it’s coming now. But now or later, further up remains the expectation.


Tucker: The S&P 500 has been in a consolidation pattern for 6 weeks now. However, the S&P 500 is only 10 points away from breaking above the high of 2282.10 on January 6th. The squeeze has been on for over two weeks, and momentum is higher today. The S&P 500 appears to be positioned to break above this resistance level soon and begin the 2nd faze of the rally that began on November 8th.

Chris McKhann

Chris McKhann

Chris McKhann has been involved professionally with the stock market for more than 15 years and specifically with derivatives for 12 of those. He started as a stock broker, but quickly moved on to options and futures trading. He spent some time as the Derivatives Product Manager for TD Ameritrade. He was the chief analyst and hedging strategist for OptionMonster. He has been an options trading educator and content provider for many years. His writing and analysis has been featured on Reuters, the Wall Street Journal, Forbes, TheStreet, CNBC and internationally. He has also designed and traded option and futures strategies for prop trading firms and hedge funds as well as managed accounts.

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