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Investors Intelligence Newsletter continues:

“That figure would have been even higher if some former bulls hadn't turned cautious. We now count the most bulls since April when their number was falling from 52.7% late March, when many averages last set their 2012 highs.

Too much bullishness is negative but we don't start to worry until they exceed 50%, so for now the contrarian sentiment reading still predicts higher markets. From March the bulls fell quickly down to 34.0% at the start of June. That is when the averages traded down to their 2012 lows.

There was a small pullback for the bears, to 24.7% from 26.6% last issue. Some advisors noted the new index rally to highs and threw in the towel; now believing that some solution will occur in Europe to maintain the common currency and that the US economy will continue its slow growth.

Others maintained their skepticism that the stimulus/bailouts will work and that the US political deadlock did not bode well for next year. Very few are yet commenting on the US Presidential election, and what either parties victory might mean for the stock market and overall economy.

There was also a drop for the advisors calling for a correction, at 28.0%, from 29.8% and 30.9% before that. That latest reading is substantially lower from two shown earlier this year. They were 39.4% on 1-Jun, when markets were at lows, and 40.9% to begin May when indexes were near highs.

Both times many advisors were uncertain and looking for the opposite direction. Now they appear to be shifting to a bullish stance, which will ultimately signal danger if the trend persists.

The spread between the bulls and bears expanded to +22.6% from +17.0% a week ago. That is nearly double the +11.7% reading shown late July, which was an attractive small spread. Another low difference occurred at the market lows around 1-Jun when it was +7.4%.

Low levels are favorable and major market bottoms include negative spreads. That was shown at the start of Oct-11 when it read -11.9%. Danger is signaled at +30% and above, with scary readings above +40 suggesting major tops. This is a contrarian indicator. Low or negative spreads [below zero] show little risk for new positions. High readings signal increasing risk.”

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I would just add that when the last Investors Intelligence report was published on KWN, the Dow was hundreds of points lower. At that time I pointed out the increasing pessimism into the bullish advance meant that the markets would continue to frustrate the bears by heading higher.

We are finally starting to see a decent size increase in bullish enthusiasm, and although the markets could still head higher from current levels, the bears should view this increase in bullishness as a constructive sign.

The interviews with John Mauldin, Gerald Celente, Ben Davies, Rick Rule, Egon von Greyerz, Bill Fleckenstein and Dr. Keith Barron, are available now. Also, be sure to listen to last week’s line-up of other KWN interviews which included MEP Nigel Farage, Peter Schiff, John Embry and James Turk by CLICKING HERE.

Eric King

KingWorldNews.com

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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 finally shows increasing bullishness into the recent market advance. Here is the latest Investors Intelligence report: “Typical slow summer trading persists as many large traders are also waiting for the widely anticipated stimulus measures from around the world. The largest shift was for the bulls, to 47.3%, from 43.6% the prior two weeks.”

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August 23, 2012

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