The main event yesterday was the new high in the S&P 500. This move changes the way we label the waves on the chart. So far the saying "sell in May and go away" does not apply. Investor are in bullish mood this year so they ignore the bad news.
Yesterday's slightly lower than expected Chinese industrial production and disappointing US retail sales did not dent the bullish mood. There was more disappointing news with the German ZEW expectations survey yet stock markets rose as investors bet the ECB will cut rates.
The irony is that when the mood is too bullish the market will turn down. We are approaching this moment. My two sentiment indicators that measure excessive bullish mood, 13-day BTI and 34-day BTI are near overbought. If the S&P rallies in the next few days chances are one or the two indicators will become overbought, this is why I expect the top to be above 1905.