SMALL INVESTOR BULLISH SENTIMENT SOARS NEAR 2010 HIGH

Talk about a schizophrenic market.  Just two weeks ago the sky was falling.  As sentiment plummeted the excessively fearful shorts were caught flat footed and an impressive short covering rally ensued.  Now, just a few economic reports and a brief rally later small investors are convinced that there are no risks coming down the pike.  The AAII’s bullish sentiment survey showed a remarkable rebound in recent weeks.  After hitting 21% just two weeks ago the percentage of bullish investors has surged to 43.9% – the highest reading since April 15th when sentiment hit 48.5% and just days prior to the Q1 market peak.  AAII elaborated on the results:

“Bullish sentiment of individual investors rose 13.1 percentage points to 43.9% in the latest AAII Sentiment Survey. This is the most bullish individual investors have been on the market outlook six months forward since bullish sentiment reached 48.5% on April 15, 2010. The historical average is 39%.

Over the last two weeks, investor sentiment has swung from bearish sentiment outweighing bullish sentiment by 28.7 percentage points to bullish sentiment outweighing bearish sentiment by 12.3 percentage points.

Bullish investors predominately mention that pessimism seems to have reached an extreme which should favor stocks going forward–the sky is not falling.”

The Investors Intelligence survey also showed a rebound in sentiment as bullishness jumped to 33.3% from last week’s reading of 29.4%.  Although there has been a slight rebound in this data it is not at the same extremes seen in the AAII data.

Source: AAII, II

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • Willy2

    A perfect contrarian indicator to go short !

  • SS

    futures getting gunned overnight. what else is new?

  • Skateman

    Yesterday one of our clients called us to massively increase his stock exposure. He also insisted on cyclicals. Not a good sign.

  • Willy2

    And look at the 30 year T-bond yield. It’s going up !

  • Patrick

    With this we should be making a short term trading top between here and 1130 on the S&P. Sentiment has been a good vehicle.

  • first

    Bulls 33.3%
    Bears 32.2%
    Spread 1.10%

  • paydreaux

    “SMALL INVESTOR BULLISH SENTIMENT SOARS…”

    …all 5 of them.