Tags: S&P 500 | ratio | bullish | week

AAII Sentiment Indicator Stays Bullishly Skewed, 9 Years Since It Stayed This High

By    |   Tuesday, 02 Dec 2014 08:04 AM

Since the market bottomed in mid-October, the AAII Sentiment Survey has trended toward a more bullish posture by individual investors.

Last week's report showed a bullish percentage of 52.1 percent, while the bearish percentage came in at 20.8 percent. This put the ratio of bulls to bears at 2.5, which was up from 2.06 the previous week.

This is the fifth straight week that the ratio has been over 2:1. The last time the indicator had such a streak of readings was back in December 2005.

The four-week moving average for the ratio came in at 2.76, the highest it has been since January 2011.

Looking at a chart of the S&P 500 for the two periods mentioned above, we see mixed results.

In 2005, the weeks that created the streak of bullishness saw the market move up 7.5 percent in five weeks from late October to late November.

In the four weeks after the rally, the S&P 500 moved sideways before losing 1.6 percent during the last week of December.

In 2011, after the four-week moving average peaked for the ratio, the S&P 500 dipped slightly for two weeks before rallying for three weeks into mid-February.

After the three-week rally, the index came under pressure and dropped as much as 7 percent from the high to the low during the period.

Given the way the S&P 500 performed after these two occasions, it looks like we might see the weekly winning streak the S&P 500 come to an end soon. As of now, the winning streak is at six weeks.

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Since the market bottomed in mid-October, the AAII Sentiment Survey has trended toward a more bullish posture by individual investors.
S&P 500, ratio, bullish, week
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2014-04-02
Tuesday, 02 Dec 2014 08:04 AM
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