Where Are The Buyers?

We've been hearing for some time that market sentiment should fuel a rally. At some point, that will indeed come true. But, the problem with using sentiment re my prior post is that it can stay negative or positive for long periods of time and it can always become more extreme on one side or the other. One popular advisor has called the bottom three times since the May top. Do you see three bottoms on this chart? His next call was that perceived smart options players were negative which he determined was bearish for stocks. Finally, his last call was to start raising cash. Using sentiment during this decline has totally destroyed unsophisticated bottom calling techniques.

I've talked about normalized positive volume before but let's simply look at positive volume on the Nasdaq. Below is a one year daily chart of the Nasdaq with nonnormalized positive volume overlaid on it. Doesn't look like there is alot of enthusiasm for Nasdaq stocks, does it? Will the buyers step in here upon returning from their summer vacations and fuel a rally? So far the appetite for Nasdaq stocks is pathetic in this July & August rally. We are likely days to weeks away from a very major tipping point. But, unlike the last tipping point, should the move be to the downside, I wouldn't expect a reprieve. Mr. Market has already warned you once. He isn't likely to warn you again. The quantitative measures of this market have changed for the first time in four years. Has your appetite for risk changed with it?