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This week's sentiment survey from Investors Intelligence showed that bullish sentiment among newsletter writers is near its highest levels since the March lows (50.6%), while bearish sentiment is at a five-year low (17.6%). This puts the spread between bulls and bears at 33, which is the highest level since December 2007.

High levels of bullish sentiment are typically considered contrarian, but we would note that sentiment can remain bullish for extended periods of time with little impact on the market. During the bull market from 2003 - 2007, the spread between bulls and bears was frequently above 30, but equities remained strong. While it is true that markets typically peak when bullish sentiment is high, however, high levels of bullish sentiment don't necessarily mean an imminent decline.

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Source: Newsletter Writers Are Increasingly Bullish