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Sentiment among investors has swung back to positive according to the Merrill Lynch Fund Managers Survey (emphasis added):

NEW YORK and LONDON, June 17 /PRNewswire/ — The upturn in global investor sentiment has withstood the recent large sell-off in bonds, according to the Merrill Lynch Survey of Fund Managers for June. Investors have expressed confidence in global economic recovery and, broadly, in the equity markets, in spite of their fears the sell-off would damage sentiment. The yield on 10-year U.S. Treasuries rose to 3.85 percent from 3.09 percent between the May and June surveys.

A net 62 percent of respondents believe that the world economy will improve in the next 12 months, an increase of 5 percentage points since May. For the first time since December 2007 the majority of asset allocators responding to the survey are overweight equities – a net 9 percent are overweight the asset class. Just 7 percent of the panel believes that the world will go through recession in the coming year, down sharply from 38 percent in May and 70 percent in April.

“Investors are currently ruling out the prospect of the much-feared double-dip recession, and have shrugged off the weakness in bonds,” said Michael Hartnett, Banc of America Securities-Merrill Lynch chief global equity strategist.

“While investors are finally overweight equities, risk appetite remains relatively constrained. Investors seem happy to underweight defensives at this point, but overweight conviction is tightly concentrated on just two sectors; energy and technology,” said Gary Baker, Banc of America Securities-Merrill Lynch head of European equity strategy.

This week’s AAII bullish reading is somewhat conflicting.  The reading fell to 33 from 39 last week.  This is a relatively neutral reading during the course of this bear market.