When contemplating what the market will do next many traders employ contrary thinking. The theory is that when everyone is bullish they have already acted on their beliefs and therefore there is little buying power left in reserve to take stocks higher. The same theory applies when everyone is negative. There is no one left to sell so stocks are more likely to go up.
The problem with contrary strategy is that it is extremely difficult to use with any precision. Just because there are strong emotions it doesn't mean that there still isn't plenty of buying or selling power in reserve. This is a particularly difficult problem these days when interest rates are negative in some cases and the flow of cheap cash never seems to end.
Contrary thinking probably works better when trying to time bottoms. Selling tends to be more finite than buying. Funds, especially index funds, are never going to sell below a certain level. Pessimism tends to build much faster and become much more extreme than optimism.
The current environment is an interesting one for contrary thinking as the number of calls for a substantial correction has been growing in recent months. Concerns about a slowing economy and central banks with limited ammunition make for a compelling argument. Throw in concerns about valuations, trade wars, politics and a number of other things and it isn't too surprising that market players are not euphoric even though the indices are still quite near all-time highs.
Market crashes don't occur when everyone is expecting one. Major market corrections can be self-fulfilling to some extent but when there is worry in the air then there is more likely to be some fairly fast buying support.
As I discussed this morning, seasonality is extremely poor this week. However, it is well known and that will help to keep selling contained unless there is surprise news.
There are lots of reasons for why this market will fall apart but that logic is well known and has been acted on to some extent. It is going to take something more than the same old arguments to send this market down.