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Investors Intelligence - Latest Sentiment Readings on Stocks
With continued volatility in stock markets, today King World News wanted share, with our global readers, key portions from the latest Investors Intelligence report: “Indexes all closed higher again for the second week of the New Year although the advance did moderate. European debt woes again become a factor as S&P downgraded nine EU nations. There were also some disappointing results for the current quarter. However, even taken together those could not move the markets down and each small morning sell-off was met with new buying and at least a partial recovery at the close.”
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,
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January 19, 2012
Investors Intelligence continues:
“Some bulls noted the positive market reaction to bad news and the favorable January indicator as confirming the rising trend. Bears and correction comments were not as strong but included the failure of the indexes to breakout above their fall resistance; short term overbought technical conditions and a world still awash in debt with slow growth prospects at best.
The bulls decreased slightly to 50.0%, after reaching 51.1% a week ago. That was the most bulls since late April 2011 and what you would expect following the market's 15% or so rally from early Oct, when the bulls were just 34.4%. The bulls remain below their April high at 57.3%, when many indexes achieved their yearly peaks. We are still not up to the 55% readings which are dangerous; bull market tops often include the bulls as high as 60%. The rising number of bulls over the last three months coincided with money moving into stocks. We are now getting close to readings where bullish sentiment is a worry.
The bears were unchanged at 29.8%. That number has held within 0.5% of 30% for eight weeks, even with the DJI gaining about 1200 points. We counted 46.3% for the bears at the Oct lows so about one-third of that group shifted their outlook with the initial move up. After that the majority has remained stubbornly pessimistic with almost no change. In fact some have increased the intensity of their bearish comments with a fervor we don't recall in years. We are still watching for a further contraction to the mid-to-low 20%s for the bears to provide evidence of a top. In Apr-11 the bears were about 16%, a low rarely seen reading.
The difference between the bulls and bears was +20.2%, down slightly from the previous 21.3%. Both spreads are still well below the +28.0% reading shown in July and the +40.0% difference last April so a top is not yet signaled. 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 positive reading [above zero] suggests increasing risk, with 30% the first major danger level for a rising market.”
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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
