Sentiment Is Finally Rolling Over - Very Bullish

I remember back at MarketVision 2022, held on Saturday, January 8, 2022, that I said, "Our biggest issue heading into 2022 is sentiment".

We had NEVER seen so much bullishness and complacency in the equity-only put-call ratio ($CPCE). Our 253-day SMA (1 Year) of the CPCE was lower than almost ANY SINGLE CPCE DAILY READING over the prior 15 years. It was CRAZY! My comment then, throughout 2022, and even into 2023, was that we needed a sentiment reset. We needed everyone to grow so bearish that they believed the market would crash and never come back. Unfortunately, we needed everyone to just SELL! Well, we're there. It's taken 15 months, but that 253-day SMA of the CPCE is rolling over and I now believe it spells a HUGE advance ahead. I'll show you two charts - first what this this chart looked like at the beginning of 2022 and where we now stand:

January 2022:

March 2023:

This second chart is a User-Defined Index that I created at StockCharts to adjust several daily CPCE readings from November and December that included a HUGE number of equity puts bought by institutions to hedge against large positions in a handful of key NASDAQ stocks like AAPL, AMZN, GOOGL, etc. This masked the change that we were seeing from the retail trader. This chart is much more sensible, in my opinion, and it's just beginning to roll over. There is a chance the market pulls back one final time after the Fed announcement today, but then we're heading higher. And it's going to be fast and catch most market participants by complete surprise. Of course, this is all just my opinion and I certainly could be wrong, but I'm not lacking in conviction. When I see the signals, and I'm seeing them right now, I make the call.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.