Sunday, April 18, 2010

Bulls Continue to Dominate: A Survey of Stock Market Sentiment

After Friday's decline, the CBOE equity put/call ratio moved toward levels that have been normal for the bull market, but hardly showed bearishness. Indeed, we can see the extreme bullish sentiment that accompanied the market's recent run up.

Meanwhile, the AAII poll of trader sentiment shows bears at 30%, the lowest reading since the first quarter of 2008. According to the Investor's Intelligence survey, 51% of participants are bullish, 19% bearish. Readings of less than 20% have tended to occur at intermediate-term market tops; the last such reading occurred early in January.


Toad said...

Good stuff, thanks Doc!

Michele said...

Interesting chart. I see that the put-call ratio reliably takes a dump just before a market top - until 2/22. After that, this indicator became broken. Since that date, big drops in the put-call ratio have not resulted in pullbacks.

I've noticed this with other indicators. I'm reminded of the period back in 2006-07 when people were complaining that the VIX was "broken" because it just seemed to stay stuck at really low levels for so long.