Chart of the Week: Sentiment Extremes vs S&P

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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What's been said:

Discussions found on the web:
  1. Geoff commented on Jul 18

    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.”

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