Tags: Investor | Sentiment | Bullish | Earnings

Investor Sentiment Turns Bullish as Earnings Season Heats Up

By    |   Tuesday, 17 July 2012 09:27 AM

Heading into the heart of earnings season, I thought it would be a good idea to look at the sentiment toward the overall market.

Investors Intelligence numbers show that the bullish percentage has risen from a low of 34 percent to 44.7 percent while the bearish percentage has only dropped from 26.6 percent to 24.5 percent.

What this shows is that the bullish gains have come from those that were sitting on the fence.

The 21-day moving average of the CBOE Equity Put/Call ratio has fallen from 0.79 to 0.70 since the beginning of June. The low reading for the year came back in February all the way down at the 0.59 area.

The Rydex Nova/Ursa ratio has risen from an extreme bearish reading of 0.23 back at the beginning of June to a recent high of 0.485. The 52-week high for this ratio is all the way up at 0.62.

What these three indicators tell us is that investor confidence is rising as we head into the heart of earnings season, but it isn't over-the-top bullish.

Expectations for earnings have definitely been dialed back during the last few months as economic reports have been weaker than expected. The key isn't necessarily whether the company's earnings beat or not, the key is the reaction by the market.

When the expectations have been lowered so much, it makes it easier for the hurdle to be cleared.

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Tuesday, 17 July 2012 09:27 AM
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