Investor Sentiment and the S&P 500: Bullish or Bearish?

Individual investor bullish sentiment rose to 40.94% versus last week's reading of 31.47%. Equally impressive was the decline in bearish sentiment to 39.77% versus the prior week level of 60.84%. The bull/bear spread narrowed to -20% versus last week's spread of -29%.

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Data Source: American Association of Individual Investors

Is it likely a large part of the market down draft is being driven by hedge fund redemptions? Dow Jones News Wire reported this in Thursday's article, "Each Market Rally To Be Met By Wave Of Redemption Selling." When the selling pressure from hedge funds subsides, the cash sitting on the sidelines could find its way into the equity markets pretty quickly.

Source:

• "Each Market Rally To Be Met By Wave Of Redemption Selling,” Geoffrey Rogow and Joseph Checkler, Dow Jones Newswire via INO.com, October 16, 2008.

Comments

[OldLimey:]

Help me out here. When the majority are bearish - that's good, because we're at a point of maximum pessimism if not capitualtion. When the majority are bullish - that's good, because we'll be off to the races again as soon as the last recidivists stop selling. All must be well with the world, then.

2008 Oct 17 01:35 PM

[disaster2008:]

Another blog indicates the hedge fund redemptions will continue on a "death march" through december.

2008 Oct 17 06:14 PM