part 2

3. Interesting contradiction of sentiment The ISEE had a 68 close yesterday which is usually a number you would expect in a capitulation but we need to remember the low was marked with a 220 which on the other hand would rather mark an euphoric top.
The other news is the sentiment number got to an extreme for a top which makes rather sense

Excerpt

Pessimism on Stocks Drops to Lowest Since 1987 Following Rally

Dec. 30 (Bloomberg) -- Pessimism about U.S. stocks among newsletter writers fell to the lowest level since April 1987, six months before the equity market crash known as Black Monday, following the biggest rally in the Standard & Poor’s 500 Index in seven decades.

The proportion of bearish publications among about 140 tracked by Investors Intelligence fell to 15.6 percent yesterday from 16.7 percent a week earlier. Sentiment has improved since October 2008, when the financial crisis drove the figure to a 14-year high of 54.4 percent. After plunging 38 percent in 2008, the S&P 500 has risen 24 percent this year.

Some analysts consider lower pessimism a sign stocks will stop advancing, under the theory that there are fewer bearish investors left to change their minds and purchase shares. The S&P 500 plunged 20 percent on Oct. 19, 1987.