Optimistic on the financials? You may have too much company

Feeling optimistic about the financials? You've got lots of company, it appears! Perhaps too much, at least for market contrarians. The ISE's gadget that shows the "most bullish" and "most bearish" (which you can see on the ISE webpage, site in the "other sites" listed at the right side of the page here) is showing that options bought to open are running 14-1 positive, with 13,870 calls versus just 1,018 puts. This hot sentiment is enough to place it into ISE's "Top Bullish" list this afternoon.

Should we be contrarians? Perhaps. Or at least, not rush in to follow the crowd without being very careful about it. I've posted here recently some reservations about the banking index (BKX). If it turns positive, we'll know because it will do so by breaking above trendline and price resistance levels along with the indicators confirming it's ready to change from downtrend to uptrend.

The XLF chart (below) shows that this financials sector ETF isn't trending either way right now, which is evident of course from the sideways action that set in since price moved up sharply in the first weeks of this month. Either "the crowd" knows something special, or it might be time to turn cautious on this sector again.