This is a market where fear and brave emotions are high ... BOTH at the same time.
The fearful who did not go to cash are moving to safety, and want to sell if the market can rise enough to recoup their loses.
The brave see buying opportunities and know the market is oversold.
These two groups clash in conditions like this, so I often look at our Fever Index to see how they are interacting together. The Fever index for the S&P 500 is below and shows two things as of yesterday's close.
1. The Fever Index was below 50 showing that Fear was dominating investors.
2. The Fever Index's red/blue/green trend lines are showing that the trend was still increasing fear.
Both of these are saying that investors were not hopeful before this morning's CPI numbers, and Bernanke's semi-annual economic report to the Senate Banking Committee at 10 AM in Washington.
What I want you to know about this chart is that there are two up trending scenarios to consider.
First, when the Trend is in Fear territory and it reverses to the upside, then the investor direction is to move toward Bravery.
However ... it is not until the Index moves above the 50/50 level (the solid red horizontal line) that the S&P makes it strongest and more sustainable moves. Note what happened at the Red Arrow in June when Bravery trended up and never rose above the 50/50 line. It resulted in a failure to the downside for the S&P.
My point here, is that even if the market reacts favorably to the CPI and Bernanke today, there are enough fearful investors in the mix that it will mean there is still some market work to do in order to reverse the trend up, and then get to a Bravery level.
This doesn't appear to be a situation where if good news happens today with Bernanke ... that every investor will get all enamored and positive ... because there are far too many others that have been hurt and now don't trust the market or their own ability to invest in this market.
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