As the apocryphal “Chinese curse” says, “May you live in interesting times.” We live in interesting times indeed.

The past couple of weeks have most definitely seen new instabilities and arrhythmias in the markets. While the end may be nigh … I don’t think that we’re quite there yet.

One of the interesting developments this past week was a very sharp drop in the smart-money sentiment of the NASDAQ Composite. Here’s a chart showing the sentiment in the bottom pane.


You can see that the commercial hedgers in the NASDAQ futures market went from being pretty darn bullish to extremely bearish all in the course of one week.

If that chart looks familiar to you, it may be because I wrote about the exact same kind of move in the S&P 500 back in April of this year. Here was the chart I published at that time:


At the time I wrote the following:

So … we’ve just experienced an extreme move in S&P commercial trader sentiment. 7 out of the 8 times such moves occurred in the past, the markets have disappointed the neo-bears by continuing to march higher.

Here’s where things stand today nearly 6 months later.


Could we be about to see a similar burst of bullishness in the NASDAQ Composite? I wouldn’t be surprised.