The ISEE’s close of 68 on Friday was the seventh lowest end of day reading in the index during the five years for which data is available.
As a rule, one day’s worth of data in the ISEE means very little in the long run, while a week or two of extreme readings is generally needed to provide high probability trading setups. With the ISEE currently at 107 as I type this, today is on schedule to be the ninth trading day in a row in which the ISEE has closed at least 15% below its lifetime mean of 151. In fact, looking back to the correction of the summer of 2006, the ISEE has consistently been bullish since that time period.
With the DJIA down another 150 points today, the ISEE data may not be much consolation for longs, but for those who put stock in market sentiment, it looks like the current downturn is more likely to be a short-term correction than an enduring bear market.