Investor Sentiment Indicates Increased Stock Market Risk
We use investor sentiment as a contrarian indicator, and those indicators are signaling increased stock market risk. For instance, the Investor Intelligence Bulls/Bears poll of stock market newsletter writer sentiment shows bullish sentiment moved up to 57.2% from 54.2% a week ago, which calls for defensive measures. A number above 55% means elevated risk. Bearish sentiment at 17.1% also called for defensive action. Meanwhile, the spread between bullish and bearish sentiment expanded to +40.1%, from +37.4% last time. A number above 40% also calls for elevated risk and increased defensive measures.