Oops!

Everything was looking so good with sentiment in the market, then Brexit struck. Oops! When events come out of nowhere, it is a good time to step back and watch for a few days (or weeks) while the market adjusts to the new information… because the information we previously had has been invalidated. As a result, I don’t have much to say this week about sentiment since the past few weeks of sentiment have likely been invalidated as well. Below are a few things from Friday’s sentiment that hold a clue or two.

The most significant is that tweets with price targets well below the market have returned. Traders and investors are now fearful that 1800 on the S&P 500 Index (SPX) will be revisited.

One mildly hopeful sign is that daily sentiment for SPX on Friday was fairly muted, printing only a -2. I doubt that will be the case on Monday. I expect to see a lot of fear and uncertainty show up in sentiment after reading the weekend’s headlines. If I’m wrong and daily sentiment doesn’t turn down sharply, it will be a very encouraging sign.

Breadth has been improving, but I expect to see it fall if the market falls. It will be the slope of the decline that I’ll be watching.

Conclusion

We don’t have much information to work with so we’ll have to see what the next few days bring.