Sentiment remains pretty bearish, as good second quarter earnings is ignored and there seems to be more focus on the lacklustre global economic outlook. There is a huge debate on how rising bond prices might be a sign of deflation, but interestingly, read this article that claims that we might have inflation instead of the quantitative easing by the US government. Also, this piece on the huge fund outflow caught my attention as in my records, this is a bullish contrarian sign. Meanwhile, the VIX is coming down near support at 22.5 and is not giving me any edge.
At the moment sentiment remains really weak and as you can see, investors are fleeing away from the equity market and volume is average. i still think that this initial skepticism and pessimism is fuel for the market to greater heights. Technically, Asian indices are holding up well and it seems to me that a base-building process is taking place. However, the situation in US seems bleak and i am paying close attention to it. I am no economist and i have no idea whether or not the poor economic data and concern about the widening gap between stocks and bonds will lead to further downside in the market. As a trader my job is to get into the market when i am allowed to and if the situation changes, i will not hesitate to cut my losses fast.
Only time will tell.
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