I can't help but notice that probably over 80% of the articles that I read lately about the economy are gloomy. Since most people think like the herd, most people are expecting lower prices for stocks.
I like to compare the market mood for points in time when prices are at similar levels. We were at 1089 on ES in October 2009-November 2009, January-February 2010, and May 2010-current time period. Although sentiment has improved since May, it is still rather gloomy. Definitely gloomier than in the October 2009-November 2009 period. It is similar to what we saw in February, but the gloom has lasted a lot longer this time.
If the stock market matched the negativity, I see no edge. But if the stock market is stronger than the sentiment suggests, that is a positive divergence. That is why I can't be too bearish here.
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