Sentiment readings continued to come in mixed this week. We saw a jump in bullishness in the Investor’s Intelligence Survey and a decline in the AAII poll this week. David Rosenberg had some comments on the jump in II sentiment:
“The latest Investors Intelligence survey just came out and showed that the rally off the recent lows has lured some folks into the bullish camp – 41.1% versus 37.0%; the bear camp edged down to 31.1% from 32.6%, and the ‘correction camp’ eased to 27.8% from 30.4%. The rise in bullish sentiment was the largest since February 23 and is rather startling given the intense volatility and the unusually large number of distribution days – the hallmarks of a bear market, not a bull market. When we start to see the bears outnumber the bulls in this survey, it will be a signpost to tiptoe back into the market … but not before.”
The AAII bullish sentiment poll, on the other hand, declined substantially, but still remains in a fairly neutral range. AAII‘s Charles Rotblut has the details:
“Bullish sentiment fell 8.0 percentage points to 34.5% in the latest AAII Sentiment Survey. Expectations that stocks will rise over the next six months are back to the same level they were at two weeks ago. The historical average is 39%.
Neutral sentiment, expectations that stocks will remain essentially flat over the next six months rose 6.2 percentage points to 33.1%. This is a three-month high for neutral sentiment. The historic average is 31%.
Bearish sentiment, expectations that stocks will fall over the next six months, rose 1.8 percentage points to 32.4%. This is the seventh consecutive week that bearish sentiment has been above its historical average of 30%.
The inability of the major indexes to make a sustained rebound has contributed to the drop in bullish sentiment. Many individual investors are waiting to see how the economic and sovereign debt problems evolve.”
Source: AAII, Gluskin Sheff
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.