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Investors Intelligence Newsletter continues:
“Sentiment had a further modest shift away from the optimism that accompanied the 14-Sep highs. There were changes in all directions with even some shifts to “bullish”, with the retreat seen as a new buying chance.
The bulls dropped to 41.5% from 42.6% a week ago. That is down 12.7% from 54.2%, achieved mid-Sep. Bullish levels of 55% and higher often coincide with market tops. While the indexes returned to those levels 5-Oct and approached them on 18-Oct there was no recovery in optimism for the advisors.
Many pointed out ongoing technical divergences such as the failure of new stock highs to match the level shown with the first index peak. The current readings are not significant but the direction is enough to reduce the bull-bear spread further. That will eventually produce attractive buying levels.
The change this week was to the bears at 27.7%, up from 26.6% last time. In addition to concerns over the weaker global economic environment some new bears mentioned that the averages popped on the announcement of QE 3 but immediately turned down to suggest that the latest Fed plan had little chance of working. Others noted the maturity of the bull market run since March 2009.
The spread between the bulls and bears narrowed further, ending at +13.8%, from 16.0% a week ago. That reading continues to contract from the 29.7% difference shown 16-Sep. A 30% reading is considered negative, suggesting a pullback is close, so the reading was a major worry.
The data is approaching the +7.4% difference shown 1-Jun. That attractive narrow spread occurred with the market lows so far in 2012. Low spreads are favorable and major market bottoms include negative spreads, such as early Oct-11 when it was -11.9%. Danger is signaled at +30% and above, with scary readings above +40% suggesting major tops. This is a contrarian indicator, with high readings signaling increasing risk and low levels are positive.”
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I would just add to what Investors Intelligence has said here that we are finally starting to see a decent decrease in bullish enthusiasm, and although the markets could still head lower, the bears should keep an eye on the declining bullish readings. The current spread between the bulls and bears is only 6.4% away from the low set on June 1st. That marked the dead low for the Dow and other global markets before they began running higher.
© 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.
The interviews with Gerald Celente, MEP Nigel Farage, Dr. Stephen Leeb, Rick Rule, James Turk, Jean-Marie Eveillard and Bill Fleckenstein are available now. Also, be sure to listen to other recent KWN interviews which included, Art Cashin (UBS $612 billion), Jeffrey Saut (R.J. $360 billion) and John Embry by CLICKING HERE.
Eric King
KWN Update - Here Is A Huge Key To The Markets
With tremendous volatility in global markets, investors and professionals are wondering where the markets are headed from here. This piece will provide a huge clue for investors. Today King World News wanted share with its readers key portions from the latest Investors Intelligence report.
This is an extremely important piece because it shows a significant change in the bullish readings into this recent market decline. Here is the latest Investors Intelligence report: “Index and indicator charts achieved highs on 14-Sep and the overall trading for the last two months shows large tops forming. Recent weeks have included the start of breakdowns from the peaks with down and up trading, including lower highs and lower lows.”
© 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.
October 25, 2012
