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Overall investors didn't panic back earlier in the year when the S&P 500 fell
around 12%. Since the 2009 low each significant pullback in the S&P 500
has been accompanied by a decent drop in overall bullishness. Notice the %
difference between Bullish and Bearish sentiment in previous corrections (points
A to B) fell to -8% or lower (points C). These previous events were
eventually followed by a higher high in the S&P 500. Meanwhile with the
most recent correction, earlier in the year, notice the % difference between
Bullish and Bearish sentiment didn't drop below the 20% level (point D).
Thus investors certainly didn't push the panic button like they did with
previous events. This may explain why most of the major averages (except
for the tech heavy indices) haven't rallied strongly from their lows made
earlier in the year.
In the near term the S&P 500 has rallied back to the 2800 level which coincides
with its previous high in March (point E) and the 78.6% Retracement Level.
Furthermore, since the late June low, the S&P 500 has exhibited a small 5 Wave
pattern to the upside which is likely nearing completion. Thus I expect a minor
correction will probably develop next week.
A test of the upward trend line would be a potential target which is nearing the
2745 level.
Amateur Investors
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