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S&P 500 Index: Clear Signs of an "Ebbing Ebullience"

How sentiment measures serve as useful aides in evaluating the stock market

by Bob Stokes
Updated: August 15, 2019

Investor psychology is so important that EWI publishes a section on the subject each and every month.

This chart and commentary is from the section found in our July Elliott Wave Financial Forecast:


There have been wide market swings since [the January 2018 top]. The back-and-forth nature of these moves over a months-long time horizon appears to be weakening investors' bullish intensity. The middle graph on this chart shows the Daily Sentiment Index (courtesy, which surged to 96% bulls on S&P futures just days prior to the peak in January 2018. The highest reading in [the current wave] so far is 91% in early April. The Rydex Total Bull/Bear Ratio is another sentiment indicator that EWFF showed in January 2018, right at its all-time high... A recent high of 25.4 on May 2 is slightly lower.

So, our analysis was anticipating that the weakening in "investors' bullish intensity" would persist. Hence, expect downside action in stocks just down the road.

The S&P 500 index hit 3026 on July 26, a record high. But, in just six trading days thereafter, the benchmark had surrendered 6% of its value, closing at 2845 on Aug. 5. On that date alone, the index lost 3% of its value. As you probably recall, the DJIA had plummeted 767 points.

Yes, the S&P regained a lot of ground, but then another deep stock market dive followed on Aug. 14.

As I'm writing this, the S&P 500 is trading well below its June 28 level (2,942), the date when the Elliott Wave Financial Forecast warned of an "ebbing ebullience."

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Is MAJOR Volatility Dead Ahead?

Well, since January 2018, there have been wild swings in the stock market.

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