The bulls are back!  All it took was a stock market rally for the bulls to realize that the world wasn’t ending.  Of course, as they were pessimistic at the bottom they’re now optimistic after a huge short-term move in stocks.  According to the AAII bullish sentiment declined a bit this week, but remains firmly in excessively bullish territory:

“Bullish sentiment, expectations that stock prices will rise, fell 5.9 percentage points to 45.0% in the latest AAII Sentiment Survey. This is the third consecutive week that bullish sentiment has been above 40%. The last time we saw such a streak was April 15, 2010. The historical average for bullish sentiment is 39%.”

The Investors Intelligence bullish survey also jumped this week from 36.7% to 41.4%.  This is a more neutral reading than the excessively bullish posture expressed in the AAII survey, however, this does represent a sizable near-term move from very bearish sentiment just a few weeks ago:

Charles Rotblut at AAII believes investor psychology remains fragile.  He describes the current sentiment as a “cautious optimism”:

“Individual investors continue to remain hopeful that a short-term bottom in the markets has been formed. It is a cautious optimism, however, as any pullback in stocks or weaker-than-forecast economic data could easily fray individual investor’s nerves.”

Source: AAII, II

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