The investor sentiment indicators as measured by the VIX, VXO, and VXN are beginning to show some slight anxiety among investors, but not enough to put in a temporary bottom. As a reminder, the three indexes above are sentiment indicators that measure optimism and pessimism in the market place. They are often used as a contrarian indicators since they also gauge investor expectations.
So, where is the turning point in the market ? Obviously Dow 10,000 was not enough to scare investors, but 9800 may start to get someone's attention. Once we hit the 9800 mark on the Dow, we should see the VIX index climb above 20, possibily to 25. This should be a good point for the markets to stage a turnaround.
Naturally, if oil prices stay under $50/bbl next week or go lower, a move toward Dow 9800 mat not be necessary. Seasonality is usually positive for the markets in Q2. May is when we should start getting concerned. Now that oil has broken the $50 barrier, the big rally I have been predicting may be unfolding.
