Bullish Investor Sentiment at Lowest Level Since July

This week's release of bullish investor sentiment by the American Association of Individual Investors shows bullish sentiment fell to 33.65%. This is the lowest level for the bullishness reading since the bullishness reading was reported at 28.68% for the week of July 16, 2009. The eight period moving average fell slightly to 39.83% versus the prior week's average of 40.37%.

Individual investors do not appear to have reached the overly bullish state as of yet.

Comments

[logicalthought:]

While I concede that these poll results are usually a good tool for contrarians, I've been wondering for a while now if this might be one of those unusual times when "Main Street" might have a better idea than "Wall Street" about where the economy REALLY is and thus where stocks-- at least when they return to being driven by fundamentals-- are going. I think it's quite possible that a higher than usual number of these average intelligent Americans (i.e., the "Individual Investor" poll participants) have a real-world perspective that the steel-and-glass-tower, government largesse bonus-grabbing Wall Street folks just aren't currently seeing. So, you may not need to see a massive number of bulls in this poll in order to "call the top"-- just the current "moderate number" might be more than enough, as the bears here might actually be RIGHT.

Oct 30 06:53 AM

[bartpr:]

the bullish sentiment has seen a series of declining top s since 2003.
it does not appear to be an indicator of any worth because of poor correlation with tops and sentiment.

Oct 30 08:24 AM

[David Van K...:]

I have never understood the use of the AAII survey as an inverse indicator (or any kind of indicator). The survey is non-scientific, participants self-select, they can interpret "bullish" any way they want, for any time-frame they want. I am a member of AAII, and I have never voted in the survey.

Then on top of that comes the overlay of assuming this represents "dumb money," so it's considered be a contrary indicator.

Does anybody see a useful correlation in the chart above? I don't. I wrote to Mark Hulbert once, because he frequently uses the AAII inverse approach as data for his contrarian "strategy." He said he had seen (or conducted) a study that proved "to a statistically significant level," that the AAII survey was a valid contrarian indicator. He did not share the study with me, nor link me to it. Bottom line: I don't buy it...it's just noise.

Oct 30 11:23 AM

[thiazole:]

I'm a bit of a pattern recognition savant (and that is a lot of why I have my job), and while there is a hint of inverse correlation between the green and red line, I'd never present such a weak correlation to my coworkers on any project I've been on.


On Oct 30 11:23 AM David Van Knapp wrote:

> I have never understood the use of the AAII survey as an inverse
> indicator (or any kind of indicator). The survey is non-scientific,
> participants self-select, they can interpret "bullish" any way they
> want, for any time-frame they want. I am a member of AAII, and I
> have never voted in the survey.
>
> Then on top of that comes the overlay of assuming this represents
> "dumb money," so it's considered be a contrary indicator.
>
> Does anybody see a useful correlation in the chart above? I don't.
> I wrote to Mark Hulbert once, because he frequently uses the AAII
> inverse approach as data for his contrarian "strategy." He said he
> had seen (or conducted) a study that proved "to a statistically significant
> level," that the AAII survey was a valid contrarian indicator. He
> did not share the study with me, nor link me to it. Bottom line:
> I don't buy it...it's just noise.

Oct 30 11:40 AM