January 23, 2020
Last Friday we noted some price deceleration in the S&P 500. That trend has continued this week and comes at a time of ‘elevated’ short-term bullish sentiment in the AAII polling data. Sentiment indicators tend to be reliable contrarian indicators only at extremes. We’re not there yet, but with the recent price deceleration, we see an increased probability for a near-term pull-back of maybe 2-4%. Picking a round number midpoint, we could see short-term SPX consolidation to ~3200 before a resumption in trend.