PESSIMISTIC SENTIMENT REACHES NEW LOWS, COULD BE FORESHADOWING A TOP

2 December 2009 by Cullen Roche 0 Comments

Investors are increasingly confident in the recovery story. According to Investors Intelligence survey of 140 newsletters just 16.7% are now bearish. This is the lowest reading since June of 2003 after stocks had rallied 30% from their 2002 lows. Curiously, the survey also showed that 33% of investors expect a correction of 10%+ – also an abnormally high level. Michael Burke and John Gray, editors of the survey, called this phenomenon “very unusual” and believe it could be setting the table for a market top:

“As the markets often confound expectations, we could see a year-end rally to new highs that could force the correction camp to capitulate and buy on strength. That, we think, could mark the top.”

Source: II

Cullen Roche

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