The Investor's Intelligence sentiment survey, conducted by Chartcraft, Inc., came out with another very large jump in overall bullishness for the week ended last Friday. The bearish percentage fell to a 16-year low. The bearish percentage is in the bottom 8% since 1969, while the bullish percentage is in the top 8% since '69. Lotsa newsletter writers jumping on this rally.
Usually, the bears speak loudly during a major pullback. They often say little during a big rally. The oppoiste is true for the bulls. The behavior of the stock market in the last few weeks explains it all.
The Investors Intelligence survey was released this morning and continues to show record readings in absolute bullishness as measured by bulls minus bears. In fact, the difference between bulls and bears rose to 42%, the highest differential since August 1987. Ominously, such was the extreme bullishness that pervaded the markets right before the stock market crash of Black Monday that erased 22% from the Dow
I think the market is WAAAY overvalued, but as a trader, I play the trend until the trend is broker, right?
I don't have enough information to be a contrarian, and I don't think any individual investor does. You need massive research and deep pockets to be a successfull contrarian. Being more and more bearish as the market RISES is not a winning strategy for joe six pack or for me.