Bearish Sentiment = Greater Market Potential

The speakers discuss the market and sentiment and go on to discuss some very important sentiment indicators such as the NYSE short interest ratio, put/call ratio, and COT report.
 
When there is a overwhelmingly high level of short interest on the NYSE, the market can rally strongly on an overdue bounce which will result in a short squeeze.  The higher the price moves, the more short sellers will be forced to cover their positions. 

The second ratio discussed is the put/call ratio.  This is the ratio of the open put position to open call positions on the S&P 500 futures.  A high ratio will indicate a high amount of put buying which can indicate skepticism in the marketplace and can be very bullish in the face of a rising market.  Markets top on frothy bullishness while they bottom on fear. 

Finally, the COT report, or the committment of traders report measures the activity of the small speculators in the market.  This is historically the group of traders that should be bet against.  They are typically on the wrong side of the market.  Typically, you want to be doing the opposite of the "herd"