Editor's Note: Helene Meisler's column runs exclusively on RealMoney.com; this is a special free look at her column. For a free trial subscription to RealMoney.com, click here. This article was published May 17 on RealMoney.

Sentiment is one of those indicators that can be very subjective at times. You see, bells don't usually ring loudly to signal market turns. More often than not, it's like a little tinkle.

For this recent market rally, we didn't hear bells ringing or drums beating because all of the sentiment indicators I follow weren't saying the same thing. For more than two weeks now, I've repeatedly cited the 21-day moving average of the put/call ratio as one sign of a shift to excessive bearishness.

This indicator isn't perfect; nothing is. Two weeks ago this past Tuesday, it turned down and signaled that a shift in sentiment was taking place, but we only began to rally (at least for more than one day) this week.

The most interesting part of watching this indicator is seeing how little it has actually moved this week compared to last week. This week, it has essentially stood still. From the daily readings (as opposed to the smoother ones of the moving average), I can extrapolate that there was only one day when folks really rushed in. That's not enough to move this indicator from too bearish to too bullish.

In addition to this indicator, I also noted in

Monday's column that the Market Vane bulls had come all the way down to the 20% level, which is normally associated with rallies.

Those two indicators are not very subjective; you can see their readings on the charts. But I'd like to share some anecdotal evidence of sentiment with you -- just some observations.

To begin with, has anyone noticed that as soon as

CNBC

started putting the Russell 2000 in its "bug" on the lower right of the TV screen, the index began to underperform? Now it's too early on a long-term basis for the small-caps to roll over right here and enter a bear market. But on a shorter-term basis, it's easy to see how they can underperform now that everyone believes they're so important.

That brings me to

Thursday's column. I actually said something nice about the

Nasdaq's

volume vs. the

New York Stock Exchange's

volume, and almost every email response I received was informing me that the Nasdaq's volume these past few days was due to

WorldCom

(WCOM)

. Talk about rationalizing an indicator!

In my

column Wednesday, I wrote: "And I won't beat a dead horse by excusing the Nasdaq's surge in volume and attributing it to WorldCom. (If I did that, then I'd also have to make an excuse as to why the relationship of upside volume to downside volume was worse Tuesday than Monday.)"

Let me explain. I don't like to rationalize an indicator because on any given day, we might be able to say one indicator did something for one reason, and another indicator did something else for another reason. They did what they did because they did it. Let's not try to outguess why.

But if you want me to rationalize it, then let's put it this way. Let's take the 600 million shares of WorldCom out of the count. That takes Tuesday's volume down to 1.9 billion shares. That still isn't too shabby. But beyond that, that was downside volume on WorldCom, so that means instead of having 1.6 billion up vs. 800 million down, we would have had 1.6 billion up vs. 200 million down. And that, folks, is an eye-opening ratio.

That ratio is downright bullish. So if you're going to rationalize the indicator, dismissing the 600 million shares that WorldCom traded as saying the total volume wasn't so great, then go all the way and break it down. Don't just look at the headline number. When you break it down and attribute that action to just one stock, it is

not

bearish as most suggested, but rather quite bullish.

That brings me back to sentiment. I know this is anecdotal, but the statistical sentiment indicators above concur: Even if we get pullbacks in here, we're not yet done on the rally side. We need folks to embrace this rally. We need them to dismiss the bearish signs, not the other way around.

Sure, there will be dips along the way. (Heck, despite the averages all moving higher Thursday, breadth was negative, so this isn't a great new bull market.) But until sentiment shifts (the put/call ratio comes back to the bottom of the page, the Market Vane numbers go back up, and folks in general embrace the rally) and until we get maximum overbought again (still at least another week away), we can expect more rally attempts.

Overbought/Oversold Oscillators

For more explanation of these indicators, check out The Chartist's

primer.

Helene Meisler, based in Shanghai, writes a technical analysis column on the U.S. equity markets and updates her charts daily on TheStreet.com. Meisler trained at several Wall Street firms, including Goldman Sachs and SG Cowen, and has worked with the equity trading department at Cargill. At time of publication, she held no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback and invites you to send it to

Helene Meisler.