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Today’s Chat With Jason Goepfert & Charles Kirk at Trader’s Narrative

Today Charles from the Kirk Report hosted a chat with Jason Goepfert. Here is an excerpt in case you missed it:

Yesterday’s bad start didn’t do much to tell us about what the rest of the month may hold. It wasn’t a great sign, but the last three times the S&P lost 2% on the first day of a month, the rest of the month gave returns of +14.2%, +15.7% and +3.2%….

Yesterday, columnist Mark Hulbert penned a piece highlighting October’s penchant for high volatility…

But here’s the thing…when the S&P showed a positive return over the prior month, then the average daily change in October was only +0.60%. When the prior month was negative, then the average daily change in October was +1.24%. This is an enormous difference - the average October day after a bad September was more than twice as volatile as when it followed a positive September.

Seems to me that we could be in for less volatility than normal due to the tame market over the past couple of months, and yesterday didn’t change that.

The chat was opened up to questions:

So, stepping back a bit, in your “big picture” sentiment analysis, do you have any perspective on where we might be within it right now?

sentiment cycle

Hmm, I would say somewhere near “denial” and “returning confidence”. There are a lot of arguments on both sides, which all seem cogent, but based purely on how I view sentiment, we’re not yet at an optimistic extreme, but we’re well off the “aversion” levels too.

And regarding the tip off for the end of this rally:

The biggest test for me is always how the market reacts to short-term overbought/oversold extremes. Every time we’ve hit short-term oversold since March, the market has recovered very well. Now we’ve seen a pattern of lower highs and lower lows for the second time (early July was the first), and we’ve short-term oversold. If we can’t rally from conditions like this, it is a definite warning sign that there is eager selling pressure.

Jason also featured these two disparate charts which answer just how much speculative activity we are seeing and in what form:

speculative options activity sentimentrader kirk chat

penny stock speculation charts sentimentrader kirk chat

Of course there was a lot more covered. Thanks to both for the chat. Check out their respective sites for more great stuff: Kirk Report & SentimenTrader.

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