It too is a composite made from nine different sentiment indicators. We have a second sentiment indicator called the Master Sentiment Indicator or MSI. ST-MSI plotted against the SPY from 2016. We believe this rapid rise in bearish sentiment indicates that the market is going through a short-term correction and not starting another down wave of the bear market. It's had a rapid swing toward the green zone over the last few weeks. The current reading of -6.5 is indicated on the chart in yellow. Almost all occurred at or near significant, intermediate-term buying opportunities.

The black arrows point to moments when the indicator moved into the Green Zone. The graph plots the ST-MSI against the spider S&P 500 ETF from 2016 to present. It is rapidly approaching the green zone, as you can see in the historical graph below. Table of Sentiment Indicators that make up the ST-MSI ((Michael McDonald))

The green zone represents moments of extreme bearish sentiment and indicate major buying opportunities. Three of the indicators - the five day, equity 'puts to calls' ratio and the two ProShares 'bear to bull' buying ratios - are in the green zone. The indicators that form the ST-MSI are calculated daily and responds to short-term changes in investor sentiment. The short-term master sentiment indicator, a composite made from seven, well-tested sentiment indicators, still points to higher stock prices. The Short-Term Master Sentiment Indicator (ST-MSI) This is a follow-up article to this earlier one, which contains additional detail on the individual indicators that make up the two Master Sentiment Indicators, as well as how they're put together.

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