Buying on red days will tell us more than forced buying into green

Wednesday's overall institutional activity was bullish, flow was dominated by earnings positioning and buying in the more speculative names, playing off the 2nd day of strength in small caps.

We are currently in the heart of earnings season, so our only edge from the flow is as a source of momentum over the extreme short term. Keep a closer eye on the buying in post-earnings plays to see if they can supply some clues for rotation, once we get through the next couple of weeks, as is usually the case, buying on red days will tell us more than forced buying into green.

On the sentiment front

The fear/greed indicator remains in the fear territory, so that's bullish( contrarian indicator), the make-up of this indicator includes bonds, 52-week highs, Put/Call ratio, which have all been showing signs of "fearful" behavior in recent days.

Hedge funds continue to buy and will become a big risk whenever they decide they need to sell. But for now, while they are buying, it will show up as bullish price action.

To sum up
It's earnings season, so we don't need to hurt our brains here, our best entries will come off of bullish short-term sentiment signals as we get further away from those signals, things become more difficult. Why? Because it's where reactions and movement off rotation, earnings and yields have more control and will dictate how things will look for that particular session.

There are a few things that suggest further upside to this snap-back rally, such as gamma exposure and fear/greed but those alone aren't strong enough to overpower the forces of a earnings, rotations and yields era.

Notable bettings toward individual names