HeadlineCharts.blog.com

Index of Symbols:

Sentiment is only slightly changed from last week.  The surveys show that since the lows in mid-June, advisors and investors have become more and more bullish along with the rising stock market.  Although current sentiment is high, it is still not quite at the high levels of the spring.

As mentioned in yesterday’s post, Mark Hulbert recently wrote an article for MarketWatch.com about the independent newsletter sentiment survey his firm conducts to gauge investor sentiment.  His survey shows that sentiment has reached an extreme peak and he is worried about the implications for the stock market.

Sentiment analysis is an important component when following the markets.  If too many people are bearish, there aren't enough sellers left, the balance tips to buyers and the market starts to advance.  If too many people are bullish, most funds are already invested, the balance tips to sellers and the market weakens.

One way to determine if investors are bearish or bullish is by taking surveys and tracking at what levels these polls indicate investors are at the extremes of bearish or bullish sentiment.

The chart below shows four polls and their current sentiment levels.  Keep in mind, sentiment analysis is not a science and only provides very general information.  Sentiment is not a signal to take action, but is a warning about the current state of the markets.  There have been many occasions when bullishness reached high levels well before the market started to weaken.

The II survey ticked up slightly but is still below the extreme level of bullishness.  The AAII survey ticked down slightly but is at the high end of the neutral range. Market Vane ticked up and is at a level of extreme optimism (this poll has a different range than the other two).

All charts and comments are intended for educational and discussion purposes only. No investment recommendations are being offered.  WHAT THIS SITE IS ABOUT