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...!
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.