Sentiment- More Warning Signs Appear

I am beginning to see some more warning signs in the daily sentiment data. Both the ISE Equity and CBOE pull/call data have reached levels that can be a precursor to a short term market reversal.
















The red arrows on the S&P 500 chart below correspond with the low put-call readings in the CBOE data above.



















The 10 day moving average of the ISE call/put data (orange line below) is also at high levels; although not as extreme as the CBOE data.





















In addition, Ned Davis, of Ned Davis Research, reported on Wednesday of this week that his firm's so-called "Crowd Sentiment Poll," which is a composite of a number of separate sentiment indicators, had just risen into the "Extreme Optimism" zone. This indicator has risen sharply from the "Extreme Pessimism" zone, just 7 weeks ago.




The MWA Active Equity Strategy is currently 50% invested and 50% in cash. Although the current market rally could carry further; sentiment, relative strength, and other technical indicators suggest that the risk of pullback is high. I will look to put some cash to work on a market pullback, or if the technical data return to more favorable levels.

The MWA Long-Short Strategy is currently hedging it's long stock positions with inverse ETF products.

The MWA Fixed- Income Strategy is currently evenly distributed among the core fixed income ETFs. Ten year rates moved up sharply last week and I am closely monitoring the intermediate and longer term duration markets. If rates on the 10 year US Treasury should go above the 4.00-4.25% zone, a more defensive posture would be in order.

US Treasury 10 Year Yield