The number of individual investors who are bearish on U.S. equities exceeds those who are bullish by the most since November 1990, a signal to some investors that stocks may be poised to rebound. In the week ended yesterday, about 59 percent of investors polled by the American Association of Individual Investors said they were bearish, expecting stocks to fall over the next six months. That was the highest since October 1990 and almost double the 32 percent average over the past five years. Fewer than 20 percent of respondents were bullish, the smallest since April 2005. The 39 percentage point gap between the bears and the bulls was the largest since the week ended Nov. 16, 1990, after a 19.9 percent tumble in the Standard & Poor's 500 Index from July to October that year. The index climbed almost 14 percent during the first quarter of 1991 as the recession that began in July ended. ``It's telling you everybody's very nervous, but it's also telling you there's a huge amount of cash on the sidelines which if you can take a long-term view, even a medium-term view, is very positive,'' said Elizabeth Dater, chief investment officer at AG Asset Management, which oversees $3 billion in New York. ``That money will be available to come into the market.'' The Chicago-based AAII, which has 170,000 members, allows each member to vote once a week in its sentiment survey, said John Bajkowski, a financial analyst at the association. It typically receives 100 to 200 responses, he said. The margin by which bears outnumber bulls or vice versa ``is normally a contrarian indicator when it reaches a level of extreme,'' Bajkowski said. ``How much more bearish can people become as far as their actions are concerned?'' http://www.bloomberg.com/apps/news?pid=20601087&sid=aDxnqV5lsbx0&refer=home I think I must buy ATM index call options...!
when everyone is short, it means the MM's are holding the bags on the otherside of the trade, its hard to crash a market with that kind of dynamic.
This kind of thing never really made much sense to me. So when the economy dives hard into a recession, you mean to tell me markets move down because people are buying?
DO NOT BELIEVE THESE POLLS.... these investor polls are worthless, why??? Because I remember these same exact polls in mid to late 2007 when the market was at fresh highs and everyone was more bullish than the next person, we all know what happened next. Many were saying that it was only going to get better and that the markets would remain bullish into 2008, well look what happened next. These polls are worthless.
Agree with Chris. This has all the technical looks of a major top but sentiment is on the wrong side...still Eery feel to 2000
Uhmmm... these polls are supposed to be interpreted as contrary indicators. So if they were bullish in late 2007 that would have been a bearish signal. Now a bearish retail sentiment could be interpreted as basis for an medium term bottom.
Can an investor, by definition of the word, actually short? Doesn't that mean that if they are bearish on stock market then they would be pulling cash from stocks without necessarily going short based on their expectations? Imagine a short seller arriving at the annual share holder meeting and stating that he has the right to be present as he represents the shorting interest!
Two points. True, few investors sell short. However one can easilly extrapolate from the sample that if investors are nervous then traders who respond to the same impulses are already short. Hence the chance for short covering. Ala' a 50 point ES move in 24 hours. Secondly, an under invested mutual fund manager is a de facto short. If stocks rally and you're 25% in cash then your performance suffers to the benchmark. On rallies then you'll see funds spending excess cash on anything they can.
index based short multipliers... a new animal just in time for the bearishness, sure..lets make it easy for retail to short... I wonder why?!