The number of bulls climbed to over 40 this week. The long run average is 39 so this is just barely above the norm. This was the only survey that was actually bearish at any time this year. Since this is in the normal range it is not telling us much other then nobody can use it as a contrarian sign to be bullish anymore.
Next up is the NAAIM survey.
It was little changed this week. It is still in the high range of its entire history going back to 2006. Sentiment has cooled some from earlier in the year, but is still very bullish. No sign of the bears here.
Here is a look at the latest II survey.
The bulls ticked up again this week. The more important number though is the bears. They have been under 20% for seven of the last nine weeks. This is in the extreme low end of this survey's historical range. This is very consistent with tops preceding pullbacks lasting weeks rather then days.
Everybody keeps telling me this is the most hated rally and everybody is bearish. So why are all the sentiment surveys bullish and people are loading up on margin. Margin debt was near record levels way back in March. I would not be surprised to see it at new record highs since the market kept rising since then. Bears do not exist in large numbers. They have been put back in their caves. The bulls are running rampant in their pastures. If sentiment is signaling anything it would be of caution.
Bob
2 comments:
Margin debt levels are skewed currently since margin costs are artificially low thanks to Ben holding cost of money below where they were if normal market forces were at work. One can take on margin and the cost of carry is substantially lower than the dividend yield available on many plays. That was not the case 5 and 10 years ago.
I guess I am not exactly clear on what your point is. I agree rates are low and that may foster the addition of margin debt. However, when the market corrects low interest rates will not stop margin calls. The more margin debt there is the higher the down side risk is for the market regardless of interest rates.
Bob
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