The Sentimeter remains in neutral territory. Two weeks ago, the "dumb money" was extremely bearish, and this was a bull signal. Buying arrived where and when it should have. This past week, Federal Reserve's announcement that they were NOT taking the punch bowl away moved the SP500 to all time highs. The bears of two weeks ago were left on the sidelines hoping to get a dip so they can chase prices higher.

Yet, by the end of the week, didn't it seem like Bernanke fumbled the ball? Why was the taper off the table when he had told the markets for months that they were going to start with a measly $15 billion dollar reduction per month? Is the economy that weak? Has Bernanke lost all credibility? The markets reversed all of the "taper off" gains by the week's end.

While we can speculate what it all means, the truth is that shallow dips, like we had 3 weeks ago, lead to marginal highs at best. It has been nearly 2 years since the last "real" bull signal when investors were extremely bearish. Over the past 2 years, any modest selling has been met with either the introduction of a new Federal Reserve asset purchasing program or the proclamation (i.e., jawboning) that asset purchases will continue essentially forever. The market needs to clear itself of the weak hands, and the best way to accomplish this is selling. Anything short of this will lead to the same old thing -- shallow dips and marginal new highs!!

See the Equity Market Investor Sentimeter below, which is our most comprehensive sentiment indicator. This indicator is constructed from 10 different data series including opinion data (i.e., how do you feel about the market?) as well as money flow data (i.e., where is the money going?). The current state of equity market investor sentiment is NEUTRAL.

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