After taking it on the chin day after day trying to top tick the market for the past 2 weeks or so, the bearishly inclined trading community (which makes up the majority of traders today in my opinion) may have temporarily thrown in the towel. You can see this today as evident by the very low put/call ratio. Mind you, this is only one day....we could very well see these clowns pile into puts again on the first hint of weakness. However, I have to say that the charts look extended here when you look at how far the market is above the 200 DMA and the parabolic rise as of late. This suggests a breather at the very least is forthcoming. We're also starting to see "melt up" chatter which in the recent past has been a pretty good contrarian sign of a ST top. The trading community is basically throwing their arms up in the air saying "you can't stop this market because of the fed" which means that even though they may have given up trying to short the market they still don't believe in it. That's been the story for pretty much the last 10 years.
So, assuming that lots of bears have temporarily given up, the market has lost a source of fuel right at a time when it's looking a bit parabolic and overbought. As such, I expect to see the market cool off in the near future. For how long or how deep I don't have a good feel at this point.
But don't get me wrong....the underlying skepticism of the market is still there and we aren't seeing the type of exuberance that we saw in late 2017-early 2018. If the market drops 2-3% I expect to see pessimism ramp up again.
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