Bullish Sentiment Reading A Positive Data Point For Stocks

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Includes: SH, SPY, SSO
by: David I. Templeton, CFA

This morning the American Association of Individual Investors reported individual bullish investor sentiment decline 6.9 percentage points to 28.5%. This compares to the February 6, 2014 level when bullish sentiment was reported at 27.9%. All of the decline in bullish showed up in the bearishness reading that rose 7.3% to 34.1%. The 8-week moving average of the bullishness reading declined to 36.9% and is the lowest level since this average was reported at 35.8% in mid July of 2013. For investors, this measure is a contrarian one and is most accurate at its extreme. This week's lower bullishness level is one that is approaching an extreme and in and of itself is one a positive reading for the future direction of the equity market if one is a bull.

From The Blog of HORAN Capital Advisors
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Source: AAII