Stock Market: Buy, Hold or Sell? Poll Results

I posted an opinion poll about the outlook for the US stock market on Tuesday last week. In essence, the poll set out to determine readers’ views about the direction of the stock market over the next few months. More specifically the poll asked about the level of the S&P 500 Index (893 at the time of the poll) by the end of September 2009 and December 2009 respectively.

A total of 615 people participated in the September poll and 511 in the December poll, answering as shown in the tables below. Click to enlarge:

The S&P 500 improved on the first three days of the poll, but declined marginally on the last day, leaving the Index 2.9% higher over the voting period.

The poll results indicate quite negative investor sentiment. As far as the three-month period to September 30 is concerned, 71.9% of the readers see the S&P 500 declining, while a majority (55.1%) also see the Index down by the end of the year.

If serving only one purpose, and admittedly based on a relatively small sample, the voting indicates that there is not universal bullishness as is often cited by pundits as an argument in support of equities having experienced nothing more than a bear market rally since the March lows.

Interestingly, the bearish poll results are confirmed by last week’s survey by the American Association of Individual Investors (AAII), indicating 48% of investors were bearish while 28% were bullish. As reported by Bespoke, the bull-bear spread of -20.8% was the lowest level since the week ended March 12.

Click to enlarge:

Source: Bespoke, June 25, 2009.

Comments

[TradingHelpDesk]

Another very interesting article thank you.

I think there is a higher correlation between responses given to polls like these and the past month's equity market performance, than the responses and their predictive ability of future performance.

If markets are weak in the month of the poll, they give pessimistic predictions and vice versa. June saw the rally stall so investors are worried again.

There are reacting not predicting. Is that possible? I am asking, not telling.

2009 Jun 29 06:41 AM

[BlueOkie]

Do you think a Presidential Election might have had something to do with the results?

2009 Jun 29 07:10 AM

[AndrewBaker]

Given each voter is of equal means, assume those thinking the S&P will be down will not be buying stocks but more likely selling, and assume also that they will be selling to those who think the S&P will be up, then the supply will be greater than the demand: ergo, the S&P is coming down! Funny: I think that too.

2009 Jun 29 10:24 AM

[bob will]

How about optimistically pessimistic? I am a long term bear--below ONE thousand on the DJIA by January 2013; but a short term bull--TEN thousand DJIA by Christmas 2009. However, a quick plunge to 7500 DJIA before Labor Day 2009--for a good buying point--and take profits from the "Merry Christmas!" rally on January 15th, 2010. Then a crash down to FIVE thousand by "Blue, Blue Christmas" 2010. I grabbed some very nice trading profits from the March 6th bottom up to June 1st.

2009 Jun 29 10:25 AM

[Alphameister]

In answer to Michael Young, whatever predictive value a contrary indicator such as the AAII sentiment index provides is precisely because it is reactive to preceding developments and tends to show high levels of pessimism near the market's best buying opportunities and excessive optimism at times when market risk is high.

2009 Jun 29 10:36 AM

[Henry Buttal]

I count myself as pessimistic; not because I think a short term retracement to the bottom is on order, but because I believe we are stuck in a defined trading range absent any compelling delta.

Painful...

2009 Jun 29 03:07 PM

[sethmcs]

The more bearish the sentiment the more I want to buy. I bought into the bear October bought more in January bought more in March will buy more in July. When everyone is satisified that this indeed a bull market I will hold. When the majority of analysis and folks here are bullish I will sell.

2009 Jun 30 12:06 AM