Market Doing Its Thing

The stock market did its thing again Monday, deluding short sellers and other bears into thinking it was going to suffer a larger scale pullback.

As it so happened, the S&P 500 did suffer its biggest decline since Sept. 1. While such a statement sounds impactful, it quickly loses its punch with the corollary that the S&P 500 dipped only 0.34%.

In effect, we saw a familiar pattern of buying on weakness that restricted the losses.

The market's resilience has been supported by a lack of extreme bullishness (yes, a lack of it!).

With the market up 60% from its March low, it may surprise some readers to hear there is a lack of extreme bullishness, yet the latest data from the American Association of Individual Investors shows a bullish investor sentiment reading of 42.0%. That is down from 51% in mid-August and not that far removed from the 200-day moving average.

Conversely, bearish sentiment stands at 40.0%, which is in-line with its 200-day moving average.

It can be said then that the stock market is indeed climbing a wall of worry. However, with bulls keeping their enthusiasm in check for now, the market's ability to scale higher still remains viable. At the least, the sentiment data suggests any near-term pullbacks will likely remain on the short and/or shallow side of things.