Investors Intelligence weekly sentiment poll generates an
interesting data trail for contrarians: The bull to bear ratio quickly highlights excesses of sentiment.
Sentiment Extremes vs S&P
click for larger chart
Source: Decision Point
Since the bull market began in Oct 2002, the chart indicates
that bull/bear ratio readings greater than 3.0 have signaled excess bullishness. That suggests medium-term price reversal
and/or a consolidation over the next few weeks.
UPDATE: JULY 18, 2005 2:35pm
Decision point discovered their chart contained a a bad data point; DIsregard this chart . . .
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Quote of the Day:
"We pay the debts of the last
generation by issuing bonds payable by the next generation."
-Lawrence J. Peter
Looks like this is a case of a bad data point:
“CORRECTION: This article was based upon incorrect bull/bear data for the week ending 7/8/2005, which resulted in an incorrect bull/bear ratio of 3.18. Since the corrected ratio is only 2.45, the point of the article no longer exists.”