Friday, September 26, 2008

Stock Market Sentiment On the Wane


A tip of the hat to Decision Point for this nice graphic of investor sentiment, as measured by the American Association of Individual Investors. (Here's the link to the free trial information; it ends on October 5th). Note how the proportion of bulls to bears (bottom pane) has steadily declined from 2004 to the present. That ratio is particularly low at present, as you can see by clicking on the chart and observing the values below the green line. Given the wrangling and finger-pointing in Washington, it is not at all clear that any rescue plan will be sufficient to rescue investor sentiment.

PS - Looking for weekend reading? Here are some of my articles in PDF.
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3 comments:

SSK said...

THANK YOU FOR THE LINKS TO THE PDF'S!, Nice chart with extreme's in sentiment correlating with market reversals. I remember once at a Jake Bernstien seminar yrs back, he mentioned that he bankrolled a trader he knew, because the trader was part of a group that Jake used in creating his public sentiment reading that was published daily. The trader was wrong so much of the time that without the infusion of new trading capital from Jake,the trader wouldn't be able to participate in Jake's valuable data set, that in trun makes Jake money, since he charges a good bit for the Bernstein indicatior, (or what ever he calls it) via his "seminars" and trading software partners,etc. Sick if you ask me, as i am not a fan of those types anylonger as they are only concerned with themselves, personally I dont think they even trade, i think they just publish, but none the less, a true story, based on Jake's assumed veracity. Amazing, thanks as always. Steve (SSK)

Bill aka NO DooDahs! said...

A wonderful contrarian indicator, those extremes in the AAII index ...

Mamady said...

All this stuff should be taken with a pinch of salt... if sentiment were a future price indicator, we would all be rich.

The same applies to consumer confidence statistics.