You can see below that in the first week of this month, we saw the Psychology Composite move back to that P4 rating that is slightly on the yellow side of the ledger.
As we noted before, this is not a big deal, but it is a "deal." We have seen a little rally in these last three weeks, which explains, to some degree, why Psychology weakened slightly (the wall of worry got a few cracks of optimism). But if you are truly excited about this rally, I'll be surprised. We have to admit that this is the seasonal time of the year that it doesn't "usually" pay to be getting a little more cautious, but this has so far been a very muted rally. The latest three-week rally was expected as a "recoil" rally from the recent extreme oversold condition, but now it appears that energy has been used up.
So, with Psychology giving this slight sign that the next 1-3 months still has a good possibility of being anywhere from lukewarm to cool, we'll continue to be a little cautious in the short-term. But...remember, the next 12-month potential is still very bullish.
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