Wednesday, 11 January 2012

US Bears are hibernating

Sentiment drives market movements I think, more than any other factor. So it is with great interest that I see the % Bearish among US investors is close to the lowest reading in 5 years, according to the following chart of AAII Investor Sentiment Survey data. Such extreme low readings of bearish sentiment often occur near market peaks, though many of those market peaks have proven short lived. 

A stronger bearish signal would be given if the % Bullish was making an extreme high, but that is not currently the case. % Neutral is near 5 year highs. 

Footnote: The AAII Investor Sentiment Survey measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market for the next six months; individuals are polled from the ranks of the AAII membership on a weekly basis. Only one vote per member is accepted in each weekly voting period.