In my post on 6/30 I asked if bearish sentiment had peaked. I think the answer to that question is an unequivocal yes. But now we may have a problem. Sentiment has swung from a bearish extreme on June 17 to an almost bullish extreme in only two weeks. The same shift took months to occur in 2010. While it is possible that this could be signalling the kickoff to a powerful rally, the more likely explanation is that we have had a massive short covering rally that is probably finished. In any case the market has come too far too fast and a sharp pullback is in order.