BULLISH SENTIMENT PICKS UP
Bullish sentiment ticked a bit higher this week (see here for more) as higher markets reassured investors during the course of the recent three week rally. The most recent investors intelligence poll showed that bullish advisers jumped to 42.1% which was up from 41.1% last week. Bears declined to 22.7%.
The latest AAII poll showed a bullish reading of 35.9%. This is not an overly bullish reading, but does showing an increasing level of complacency in the market. Charles Rotblut at AAII elaborated:
“Individual investors are less fearful than they were a few weeks ago, but they remain cautious. The continued stabilization of the markets has helped to calm short-term worries. A good fourth-quarter earnings season and encouraging guidance is providing reason for hope. On the other hand, individual investors continue to fret about the slow pace of the economic recovery. Furthermore, ongoing uncertainty (rising interest rates, higher inflation, government debt levels, etc) has them thinking about protecting profits.”
Source: AAII
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this is scary, concerning the Hulbert newsletter sentiment index:
“It currently stands at 62.8%, up from 13.8% just one month ago. That’s an awfully big jump for so short a period of time, especially considering that the Dow Jones Industrial Average rose a modest 4.4% over this period.”
from http://www.marketwatch.com/story/advisory-bullishness-reaching-too-high-levels-2010-03-05
maybe the party will be ending sooner than i thought…time to tighten stops
Didnt take much for you to side with me, huh?
i said tighten stops, not go to the dark side…
The dark side? Shorting is no different than going long really. Except I am taking the opposite bet. I am betting your team will come up short. I don’t know why investors are conditioned to be long….
Right now, my team has the upper hand according to my odds. We’ll see how it all plays out.
the biggest issue i have with shorting against the market, as opposed to shorting with the market (i take it we are in agreement that currently shorting is against the market), is that it involves a certain amount of intellectual/psychologicial hubris
now if that’s what you think, fine, but i have a hard time doing it…i don’t seem to have as much trouble going long against the market, which i suppose supports your point…it may be linked to one’s optimism/pessimism framework generally, but i have a harder time developing negative conviction than positive conviction
as for whether they are really just different sides of the same trade, well i would point out that there are more positive years than negative years