I'm Struck by How Bearish Everyone Has Become

The question I see asked most often now is if we have seen capitulation. By most measures we probably haven't. 

For example, during this entire decline the TRIN has not gotten over 2.0 once. It came close with a reading of 1.99 last week but a reading over 2.0 is when we know there has been some real panicked selling. 

We haven't seen the VIX get to its usual jumpy self. Did you see where it ended the day on Monday? Up 50 cents. Come on, after the day we had, the VIX was essentially nowhere. 

We have seen exactly one day where 90% of the volume is on the downside. We've come close a few times but only once was there wholesale dumping enough to take that down volume reading to 90% of total volume. 

Long time readers know I am not known for my sunny disposition when it comes to markets. I am a contrarian; when we're going up, I look for what can take us down and when we're going down I look for what can reverse us back up.

But it struck me when I took the mute off the television on Monday how really bearish everyone was. All of a sudden no one is interested in buying the dip. No one is even interesting in "picking." All of a sudden everyone is talking about at least a revisit of the February lows or more. 

Remember when there were targets on the upside of 3,000 or 3,200? Now I see 2,300 or 2,200 coming out. We might get there but I find it fascinating that many of the new found bears all of a sudden want to buy the market lower.

I also find it fascinating that breadth is not even being discussed. Back in September I noted that there was a negative divergence when the Cumulative Advance/Decline line refused to confirm the higher high in the S&P. That was a clear case of a lower high (red line).

Now take a look at the lows from February and April on the chart of the S&P (green line). On a closing basis we are now about 50 points away. Quite frankly the way this market jumps around, we could do that in an hour, but step back for a minute and look at the chart of breadth (cumulative a/d). It is nowhere near the February or April low. Not even close. That could be a positive divergence. 

This would be me being Miss Mary Sunshine!

I am still looking for us to get back to short-term oversold midweek this week and intermediate term oversold near the election. If we can get those Investors Intelligence Bulls down this week, that would be helpful to that cause.