Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Short Interest Off The Charts...Fed On Deck....

Stock-Markets / Stock Markets 2015 Sep 17, 2015 - 11:45 AM GMT

By: Jack_Steiman


A new report came out this morning showing trader-short interest is at an all-time high. Nothing like fear to create a more bullish environment. The short interest here is at a greater level than at any time during the 2000-bear market or the 2009-bear market That's almost impossible to believe, but that's what the numbers are showing. Most folks know the rule of this crazy game with regards to following the herd. Never do it! If the masses get too bullish it's probably not a bad idea to start removing most of your long holdings. No different than when things get far too bearish. Right now the trading world is far too bearish, which tells me that over time it's more likely, though no guarantee, that we'll get through S&P 500 1993 before losing S&P 500 1867. Taking out 1993 would negate the bearish-bear flag pattern, and set things up more balanced between the two sides. Then it would be more about sentiment.

The best thing I can say is that I personally wouldn't be shorting very much if at all when I see this type of bearish sentiment taking hold of traders. We all know what froth on the bullish side looked like, but we have done a full, one-eighty here. The bearish sentiment is now off the charts, and, thus, it seems the best strategy would be to buy weakness, such as when the short-term sixty-minute charts unwind from overbought. This doesn't mean we can't go lower because we can, but it tells me selling should be contained more for the short term at least. With the bull-bear spread now at exactly zero, the bulls don't have to worry about froth for a very long time to come, while the shorts need to worry about too much fear, and, thus, too many short plays out there that will need to be covered if we start to take out 1993 on the S&P 500. While things still aren't very good economically for the bulls at least they can feel good about how things are working on the sentiment from. All time short interest is nothing to ignore.

Tomorrow we get the news from the Fed Yellen regarding her action on interest rates. The market is going to have a fairly strong reaction, except I honestly don't know what it'll be. I do believe the market wants to remove uncertainty meaning it would like to see a rate hike. The Fed could raise rates a quarter of a percent which is nothing and remove the fear of an aggressive cycle and I think the market would like that. It wants to see confidence. If she shows more fear I think the market may not like it initially. It may not like either story initially, but I think that the market would rally back based on the fear situation I just spoke of. That said, I do think it would be best to raise rates and get on with things. This zero-rate cycle has gone on way too long and is letting traders know that the economy is not in good shape.

Even if it's a small percentage, it would be good just to start moving those rates slowly higher. Again, remove uncertainty. Show a bit of confidence. The market should move about quite intensely for the last few hours. It will be exciting, but difficult to trade so patience would be best. If we can get some weakness that would help unwind overbought sixty-minute charts and offer up better buying opportunities. We all know the Fed doesn't really think things are good economically, both here and abroad, or she would have raised long ago, but there's always the new moment to show some faith. Maybe now she'll get going. Probably not it seems as most supposed experts believe she'll wait until at least December, but I think that would be a mistake. Nothing is more important to the market than showing a belief in the economy. While a quarter hike is far from that reality it's at least a start. Everything has to have a starting point and I think she needs to start right now. It will be interesting not in only what she does, but the wording behind the action. Stay tuned for a very interesting day tomorrow.

The market is more interesting now since we have fear and the Fed working things. 1993 on the S&P 500 is all we really care about on the up side, and 1867 on the down side. It doesn't matter how we get to either number. All that matters is we get there. Which one will it be? I think in time we break through 1993 simply because the fear is so incredibly intense. No guarantee on that, of course, as so many unknown outside events could kick in without warning. But aside from the unknown, it seems to me that the amount of fear we're currently seeing will win the day short-term for the bulls above 1993 before we lose 1867. Buying weakness seems to be the safest way to play, but nothing too aggressive, of course. The monthly charts still stink in a very big way. A day at a time as we learn a ton more tomorrow, after we get the rate news and wording to follow.



Jack Steiman is author of ( ). Former columnist for, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

Sign up for a Free 15-Day Trial to!

© 2015

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in