Dollar Story (6): Bull Percentage Sentiments

NASDAQ and SPX confirmed Dow today by pushing new recovery highs. This places the next target for SPX at 1121, which is 50% retracement of 17 months decline from 2007 October (Dow's 50% retracement is 10,334). Wave counts on major indexes are still not very clear.

The US dollar index made a new low today and has now breached the September 2008 support level on a close basis. This may open the way for further losses down to 74.71 level.

I also show you the "Bull Percentage" numbers, red circles in the chart, all the way back to 2008 January lows. Even though the current price is still above 2008 January low, the sentiment has been already approaching to extreme level.

As Elliott Wave International analyst Nico Issac wrote, “It’s crucial to understand that markets don’t necessarily respond to sentiment extremes immediately. But, such extremes do indicate exhaustion of the trend — which is usually the opposite of what the mainstream expects.”

Apparently shorting the dollar has become extremely popular, and it’s just too crowded!

The wave counts I put in the chart are the same as I posted before. The dollar ETF UUP seems to be in the last small wave down, but the dollar index $USD (or .DXY) seems to need another "up-down" movement to finish its pattern. Also, the daily default MACD has a bearish cross down and the MACD histogram bars are increasing negatively. We need some positive technical indicators and signals to confirm the dollar bottom.