Based on data from Investors Intelligence (II), newsletter writers who are bearish on the US equity market have fallen to 15.7%, the lowest since December 2009 (15.6%) and below the level seen at the April 2010 highs (17.4%). II % Bears below 20% suggest that there are too few bears among advisory newsletter writers. As a measure of market sentiment, this has the potential to be contrarian bearish for the US equity market. Sentiment is not the best timing indicator, but after the sub-20% readings for II % Bears in December 2009 and April 2010, the S&P 500 pulled back from late January into early February 2010 (down 9%) and from late April into early July 2010 (down 17%). In addition, II % Bulls vs. II % Bears (see side bar) reached the highest level since June 2003, which preceded a sideways market going into September 2003.
Investors Intelligence % Bearish Advisors – weekly chart
+1 646 855 1888 +1 646 855 0206 +1 646 743 0228
II Bulls vs. Bears – contrarian bearish
II % Bulls vs. II % Bears reached the highest level since June 2003, which preceded a sideways market going into September 2003.
Investors Intelligence % Bulls vs. % Bears
Oversold
60 55 50 45 40 35 30 25 20 15 10
Source: Investors Intelligence
Oversold
Overbought
Source: Investors Intelligence