1. AAII sentiment survey bullish percent 12 week average at level that represented important bottom for US equities historically:
Source: Sentimentrader / AAII / TSP Talk
2. Yet Vix is at a level that has represented a top for equities the last 3 years:
Source: Forbes / Bloomberg
3. Risk appetite is reaching towards a level that has implied stocks may not be able to advance too far from here, although there is scope for the rally to continue some way further in price and time yet.
Source: Sentimentrader
4. Treasuries are at record extremes in price (with sentiment at the bullish extreme, suggesting a reversal):
Source: Stockcharts / James Craig
5. Gold miners bullishness is at the extreme low, suggesting miners should rally imminently:
Source: Stockcharts
6. Euro bullishness is also at the extreme low, a level that has historically implied a Euro rally:
Source: Sentimentrader
7. US jobless claims suggest there is no US recession now or ahead:
Source: PFS Group
S O L A R C Y C L E S 
The medium term model on the site (for the S&P 500) looks to be severely deviating from the price of the index. Considering the fact that, relative to other stock markets around the world, the SPX is overvalued and other models I have seen (analogs) are also indicating a pullback in equities as low as 1100, its hard not be bearish here.
Earnings have been rinse and repeat- revenue miss, bottom line beats. This is, of course, unsustainable in the long run. QE3 is rumored to be “any minute” but some models (B of A) shows that it is already fully priced into the markets, though I have my doubts there.
Treasury yields shot up on Friday and people are already calling for the bubble to pop. Wow, one day yields rise and the Fed has lost? Overzealous equity bulls are on the move and the myth of the bond vigilantes are sure to show their face.
The one concerning factor is consumer services and goods stocks. If we see equities higher moving forward we need basic materials and industrials to regain their footing. The consumer stocks have been performing extremely well (in particular, discount retailers) and are showing signs of breaking down during this earning season. Utilities and Healthcare are also, as expected, performing very well.
If I am going to buy equities (which I have some), I like names such as Cliff’s Natural Resources (CLF) which has a great earnings yield and has been hammered to no end this year. Some of the foreign basic materials names look interesting as well. Pan American Silver (PAAS) is another favorite of mine at this time.
On the short side, consumer stocks. Conn’s (CONN) is a dead business model. I believe the market gives it the same credit as it does a name like Aaron’s or Rent-a-Center even though its model is much different. Also, some of the homebuilders have caught a nice ride, which I am starting to put some short positions on, and Marriott International (MAR) is a name I am short for both technical and fundamental reasons. Some of these shorts and longs are synthetic plays (options).
In any case, that is a micro and macro views. We’ll see if I am even remotely close to being “right”. I am looking for the market to fall below 1200 before the election. If not and the rally continues, look for a new 2012 high in the SPX, heading for a triple top by 2013.
This stock market crash many are worrying about is not really likely to occur until late 2013 onwards because the commodity index rise of the last month won’t start to push inflation up until next summer, which will in turn push GDP growth down eventually. We seem to be stuck in a 6 year cycle, with now mimicking 2006. The major crash of 08 may be mimicked in 2014 but with a crash about half as deep, as the next major crash will be due to a US debt problem or the Euro crisis still flaring up again, as opposed to a bank collapse in the US like 2008.
Ryknow – the SP500 has diverged siginifcantly from the model, whereas the Dax and CRB have not. My expectation is that the Dax will outperform the SP500 going forward, to correct the difference to some degree. P/e valuations are lower there, the cheaper Euro will help exports, and I expect another period where the heat comes off Europe to give investors a spur to long European equities.
Pete – it’s generally about 6 months for commodity price rises to feed through to groceries, so given this rally started in June, we ought to see inflation kick off by the end of 2012. If commodities continue to accelerate in H2 2012 then that inflation should then accelerate into Spring/Summer 2013.
John, yeah I noticed that (DAX and CRB). I was long the Italy ETF (EWI) as a trade recently which seemed to work out well. I would like to get back in that or EWS, the Spanish ETF. With both of those books being under 1 and the S&P book being 2.25x or so, it seems like a good play. Or, as you said with cheaper exports, picking out individual, beaten up names that are exporters in Europe seems like a reasonable “bet” as well.