Stock Market Sentiment Indicator Moves Into Cautious Territory
Stock Market Sentiment Indicator Moves Into Cautious Territory. We use a number of sentiment indicators as contrarian guides on where the market is headed since investors inevitably are wrong. One of our favorites is the Investors Intelligence bulls/bears poll of more than 100 newsletter writers. The latest survey shows that the difference between the bulls and bears expanded further, reaching +29.8%, from +26.7% a week ago. That is the widest positive spread since late Feb and is entering a level that tells investors to be cautious (See chart below). The bulls advanced to 53.5%, from 50.5% a week ago. That is approaching the 55% area that is suggestive of a potential trading top, last shown in mid-February.. The bears barely changed at 23.7%, just below the prior 23.8% count. That is the lowest number since the first week of March, after readings below 20% throughout the prior year. In summary, this indicator is saying that the stock market may be moving into overbought levels.