I would bet most will be glad to say good-bye to February. If you look back, you might recall the final day of January and the first two days of February got the bulls quite excited, as the S&P 500 tacked on nearly 4% in those three trading days.
It wasn't quite like the giddy days of early 2021, but folks were definitely feeling good and rather complacent. I even saw several folks poking fun at some high-profile strategists, who were bearish. It was just after that we saw the American Association of Individual Investors weekly survey show more bulls than bears for the first time in nearly a year. We also saw the National Association of Active Investment Managers (NAAIM) with their exposure at the highest in a year.
Those sentiment indicators have come off the boil. Some might say the AAII has turned quite bearish again with bulls now at 21%, when they were at 38% that first week of February. The NAAIM folks have cut their exposure to 57 from 85.
For my part I see gloom building. Part of it may be the action of the last week or so. Part of it may be those who watch the calendar and seasonality as I see them reporting that March is one of the better months of the year. February certainly lived up to its reputation as a poor month in the market.
I don't think Monday's action did anything to change any minds. The indicators haven't changed much. Some have dripped a bit lower but nothing in the intermediate-term indicators has pushed into oversold territory.
Have you noticed that the bonds have been treading water for the last week? They haven't exactly rallied hard; I would call it more milling around. But in the last week there has been no further deterioration. There is decent support at the $100 area on the chart of TLT bond fund (TLT) . I can't help but think that if bonds take another dip lower from here the Daily Sentiment Indicator (DSI) which is currently 25 will plunge pretty darn quick.
And what about the high yield bond fund (HYG) ? I flagged this late January as a chart that was breaking down and then it promptly rallied only to collapse for three weeks straight in February. But now it has held this line and is higher than it was a week ago.
The bottom line is that bonds are holding, even if it is quite tentative for now. High yield is holding. And stocks, even though the rally was pretty crummy overall, did bounce off the well-watched support area. Basically nothing much changed. The short-term oversold-ness helped, but the intermediate term is still not oversold.