AAII Update

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The AAII survey has made a big jump in bullishness and now the ratio of bulls to bears is at an extreme level which has typically suggested market weakness ahead. Particularly in the context of an extreme at a lower price high I think this is significant.

A couple weeks ago I had suggested that the most likely scenario for the markets was to break above the 1130 level on the S&P 500, and to move up to 1160 before topping out. I still think that is probably the most likely scenario here based on retracement levels and price gaps, etc.

Some sentiment surveys and models are now confirming intermediate term overbought conditions to match.

On a side note, the TZA trade is obviously not following an ideal format. But there has been no oversold signal to exit the trade. Right now I doubt we will get one until the market is topped out, which I think should happen by next week most likely.