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AS STOCKS HIT HIGHS SENTIMENT SOARS

3 June 2009 by Cullen Roche 1 Comment

The bulls are back!  The AAII reading hit 43% this week as bearish investors slipped to just 25%.   This is the highest spread since early 2008.    This reading has routinely been a contrarian indicator during this bear market though the recent high readings have yet to be judged.  If the S&P 500 and more importantly, the banks, push their way through this important psychological level we could see the bull parade get a little out of control – to the point where you don’t want to be involved….

aaii1

Cullen Roche

Cullen Roche

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Comments
  • Frederick

    I’m not positioned for it at all, but it feels like this market is going get seriously jiggy to the upside tomorrow no matter what the print is on the number. And, if it prints with a 4 handle it could turn into a rout to the upside(pretty amazing to be saying that). I like the level headed approach you take, and I know you’ve dipped a toe in the water to the short side here, but the snap back seems to want to go to the inverse of the sentiment extremes that the downtrade presented. Good luck tomorrow, thanks for the blog.

    06/04/2009 at 6:52 PM