The stock market continues to crawl higher, with the S&P 500 (SPX), the S&P 100 (OEX), and the NYSE Composite printing new all-time highs almost daily, and the Nasdaq and the Nasdaq 100 (QQQ) moving ever closer to all-time highs. Yet it continues to amaze us that overall market sentiment/optimism hasn't shot to the moon. Yes some sentiment indicators have crossed over into extreme bullish territory, but many have not. This leaves us looking for reasons why. Some of the sentiment indicators that are showing outright pessimism include Hedge Fund Exposure, the OEX Open Interest Ratio, the OEX Put/Call (P/C) Ratio, and Small Trader Put Buying. On the other end of the spectrum, the CBOE Equity-Only P/C ratio is one of a few indicators that are pretty far into optimistic territory. Meanwhile, the NAAIM Exposure Index, the ISE Equity Call/Put Ratio, the AAII Bull Ratio, the CNN Fear & Greed Index, and the Conference Board's Monthly Survey are showing optimism -- but not to an extreme degree. A coincident sentiment read, the Nasdaq 100 Combo Hedgers Position, is showing very low futures exposure by the smart-money commercial hedgers -- and is therefore a potential negative for stocks. Market breadth remains quite bullish, with the SPX, OEX, QQQ, and S&P 400 advance-decline (AD) lines at or near all-time highs. In addition, 79% of stocks in the SPX are above their 200-day average; for the OEX, it's at 88%; and for the QQQ, it's at 64%. While we would prefer these readings to all be above 70%, the QQQ AD line reached an all-time high before price. (Mark Arbeter, CMT)

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

The calendar turned to September, historically the worst month of the year, and all of a sudden things go to heck and in a handbasket. Yet again, the largest drag on the stock market was the heavily weighted Information Technology (XLK -4.6%) sector. The group was once again dragged down by once-beloved semiconductor stocks, with the major semi indices getting pulverized by 7% to 8%. Since July 17, the iShares Semiconductor ETF (SOXX) and the VanEck Vectors Semi ETF (SMH) have dropped at least 6% on three different days. All three of those days featured very heavy volume, a clear sign of institutional distribution. We started to see distribution on the semis and the Nasdaq 100 (QQQ) back in the middle/latter part of July. Most of the major semi stocks have lost their 50-day average for the second time since late July, while a handful are breaking below their more-important 200-day averages and are closing in on their initial lows from early August. The QQQ cratered 3.2%, broke down out of a developing bull flag, and closed near a 38.2% retracement of the rally since the August 5 intraday low. We did see a minor 5/13 exponential moving average crossover sell signal, reversing the buy signal from August 15. A 50% retracement of the rally comes in at 454 and a 61.8% give-back lies at 447. The S&P 500 lost 2.1% as the index bounced off its 50-day average late in the day. A 38.2% retrace of its rally is at 5,448 while a 50% give-back targets 5,386. There was a 38% spike in the volatility index (VIX) and it is now just above 20. We have a feeling the month will bring more of the same. (Mark Arbeter, CMT)

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.