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Bearish Sentiment May Set the Stage for Big Rally

By    |   Tuesday, 07 Sep 2010 09:03 AM

The Investors Intelligence Advisors’ Sentiment Report surveys the sentiment of more than 100 investment newsletter editors. Advisors indicate if they are bearish or bullish and the results are released every Wednesday. 

This indicator is a great contrarian indicator and is good pointing out tops and bottoms in the overall market. 

When the bearish sentiment reaches a peak, the market is due for a rally. 
When a bullish extreme is reached, a top is likely at hand.

This past week, the Investors Intelligence report showed that the bearish percentage (37.7 percent) was higher than the bullish percentage (29.4 percent) for only the second time in the last 14 months.

The last time this happened was in mid-July right before the one-month rally that saw the S&P gain 10 percent. 

This past week’s bearish reading was the highest since April 2009, when the bearish percentage was still moving down from the peak in March of that year.  This was when the huge rally of 2009 was still in its infancy stage.

What this indicator suggests is that the rally that started last week could have some room to go. 

The S&P is facing a number of resistance levels right now via the 100-day moving average, the 200-day moving average and the 52-week moving average.  

But the sentiment toward stocks right now is still bearish and tells us that there is money on the sidelines that could come in and push the index through these resistance points.

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The Investors Intelligence Advisors Sentiment Report surveys the sentiment of more than 100 investment newsletter editors. Advisors indicate if they are bearish or bullish and the results are released every Wednesday. This indicator is a great contrarian indicator and...
rick,pendergraft,bearish,investors
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2010-03-07
Tuesday, 07 Sep 2010 09:03 AM
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