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Pragmatic Capitalism

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SENTIMENT UPDATE – THE BULLS REGAIN SOME CONFIDENCE

Bullish sentiment improved a bit this week as investors become more hopeful that a market bottom has been set in place.  Despite the uptick in bullishness overall sentiment is still relatively neutral.  According to the latest Investor’s Intelligence poll bullish sentiment was relatively flat compared to last week at 39.8%.

The AAII reported a bullish sentiment rebound of 7.3% to 37.1%.  Bearish sentiment fell to 40.8%.

Charles Rotblut at AAII elaborated on the release:

The decline in pessimism is not surprising. Throughout the history of the AAII Sentiment Survey, we rarely see bearish sentiment exceed 50% for two consecutive weeks. The exceptions are the recessions of 1990-91 and 2007-2009 recessions.

This week’s special question asked AAII members what was currently having the biggest influence on their market sentiment. The mostly commonly cited factor was the European sovereign debt crisis. Many respondents also expressed concerns about the size of the U.S. federal deficit and the potential for slowing economic growth.

However, several members had a contrarian stance. They opined that the U.S. economy is comparatively better than Europe, described the recent correction as normal and believe that there may be too much pessimism right now.

Here is a sample of the responses:

“The Greek debt crisis and its effect on the euro.”

“Worrisome debt, both in the U.S. and abroad.”

“Growth in Europe and the U.S. will be slow.”

“Stocks are undervalued and the U.S. economy is better than most.”

Source: AAII, II

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