Who said the small investor isn’t optimistic about stocks?
If you take this together with the fact that the Investors Intelligence (II) Bull/Bear Ratio has also hit its 2007 peak (see Bullishness at Record Levels), some might say that bullish sentiment has reached a contrarian extreme.
This is being passed around the trading desks this morning.
Historical comparisons within a times series must be made against appropriate time frames. While a readings above 68% preceded corrections between 2005-2008, they do not necessary suggest one now. The liquidity driven recovery of 2009-2010 mimics the early stages of 2002-2007 nominal rally. It is very likely that AAII bullish ratio will post similar extremes before the pause or correction. In addition, time for a pause is still wrong.
S&P 500 And American Association of Individual Investors Sentiment Survey Bulls As % of Bulls and Bears:
Source: aaii.com
Source: ritholtz.com/blog/
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