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Investors Intelligence - Latest Sentiment Readings on Stocks
With continued volatility in stock markets, today King World News wanted share, with its global readers, key portions from the latest Investors Intelligence report: “Stocks started 2012 with a solid single-day advance and then avoided any sign of profit taking during consolidation sessions the remainder of last week. Most newsletter editors are aware of historical stock market patterns and noted positively the gains around the Christmas holiday that extended through the start of January as further favorable signs. Index and medium term indicator charts all held existing bullish status with only some modest caution flags. The Advisors showed some new optimism.”
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
January 11, 2012
Investors Intelligence continues:
“The bulls increased to 51.1%, from 49.5% a week ago and just above their reading prior to that. Again we count the most bulls since late April 2010, when their number was contracting from a lofty 57.3% at the start of that month. Many indexes set the 2011 highs that month. Readings above 55% are dangerous and bull market tops often include them as high as 60%.
Some bulls commented on the positive year-end trading and more noted the overall advance from early Oct, when the indexes were down 15% from the start of the year. Those lows had the bulls down to just 34.4%, and well below the reading for the bears. After that the rising number of bulls coincided with money moving into stocks. However we are now approaching readings where bullish sentiment is a worry.
The bears pulled back to 29.8%, from 30.5% last issue. The bears have stubbornly held within 0.5% of 30% for seven weeks, even with the DJI gaining over 1100 points, and much more from their early Oct lows. Those showed the most bears [46.3%] since Mar- 09. That high level suggested many advisors had raised cash and the selling was near an end. As contrarians we pointed it out as a buying opportunity. We are now watching for a further contraction to the mid-20%s for the bears to provide evidence of a top. In Apr-11 the bears were as low at 16%, a low reading rarely seen.
The difference between the bulls and bears was +21.3%, up from the previous 19.0%, and heading for negative projections. The spread is still below +28.0% that was shown in July and the +40.0% difference last spring. The spread was -11.9% at the start of October. This is a contrarian indicator so wide negative spreads [below zero] are signs of low risk for new positions. The current rising reading [above zero] suggests increasing risk.”
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© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
Eric King
