SENTIMENT UPDATE: MORE MIXED DATA – Pragmatic Capitalism

Sentiment readings were mixed again this week as the AAII and Investor’s Intelligence polls give differing readings. According to the AAII bearish sentiment actually jumped to its highest level since February 18 while bullish sentiment actually declined to 32.4%. Despite the consistent rally in stocks and the bullish feel to the action bearish sentiment has risen almost 10% in the last 2 weeks. Charles Rotblut at AAII believes the increase in bearishness is actually due to the skepticism regarding the rally:

“The increase in bearish sentiment may reflect the fact that the Dow has been up 10 out of the last 12 trading days. The blue-chip average is overbought and some investors are beginning to wonder when a short-term pullback will inevitably happen.”

The Investors Intelligence poll is telling a dramatically different story. Bulls increasesd to 48.9% versus bears of just 20.5%. Last week’s reading was 46% bulls and the January high was 52%. The bull/bear ratio jumped to 2.39, up from 2.16 from last week. This is well below the January 6 year high of 3.36, but also well above the average reading of 1.57.

All in all, the environment remains mixed. Small investors remain hateful of this rally while institutional investors have tended to take a contrasting opinion throughout the rally.

Cullen Roche

Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.

He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.