The unemployment rate jumped to 9.8 percent from 9.6 percent in November, but this didn’t lower investor optimism.
Instead of taking this opportunity to take profits, investors instead stepped in and did more buying throughout the day.
This mentality goes hand in hand with what we are seeing from the sentiment indicators right now.
The Investors Intelligence report has shown increased optimism in the past month, even though the market has been considerably more volatile.
The bullish percentage has increased to 55 percent from 47 percent since early November and the bearish percentage has declined to 22 percent from 24 percent.
The CBOE Equity Put/Call Ratio shows that option traders are becoming more optimistic as well. Rather than look at the day-to-day numbers for this indicator, I prefer to look at a 21-day moving average of the ratio. By looking at the 21-day moving average, we get a good look at the trend rather than the gyrations you tend to see from day to day.
The 21-day moving average on this ratio has been declining since the end of May which indicates option traders are becoming more optimistic.
The 21-day moving average moved below 0.57 last week and this is the first time since a stretch from late March to mid-May that this indicator has been this low.
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