The 2CS index of market-based sentiment has been calculated daily since 1996. One takes the CBOE combined option put/call ratio of each of the five most recent days by multiplying each day's ratio by the same day's VXO ("old VIX"), and summing the five day's numbers. The next day's VXO x P/C is added to the previous day's summation and the 6th prior day's VXO x P/C is subtracted.
This 2CS bearish sentiment index got down to 49 on March 15 (ides), the lowest I have seen since 2007. SPX made higher closes on 3/26 and 3/28 but bearish sentiment rose to 53 and 55. This sort of divergence at very low bearish sentiment levels and during stock index high prices is common at or near market tops.
My posts have been infrequent in this grinding move up partly because I have been in southeast Mexico since early November and have travelled around quite a bit. Living this time in a growing economy is interesting in many ways. Due to the growing fear of currency debasement and capital controls in many nations, a lot of money is flowing into personal and investment real estate in Mexico. Also there is a steady increase in retirement to Mexico from western Europe and north America. Adding this to a normally growing local middle class is creating a more cosmopolitan life style and economy for all.
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