As the indices accelerate to the downside — the Dow Industrials are off 240 points as I type this — its as good a time as any to look at the current market sentiment.
These provide a snapshot into when traders and investors get too greedy or fearful. Typically, you can use these measures as a useful short term metric for timing entries and exits.
And, these data points are much more reliable than the typical anecdotal sentiment discussions: "markets should selloff (rally), ’cause everyone I know is bullish (bearish)."
CBOE Equity & Index Put/Call Ratio
AAII Investor Bullish Sentiment Survey
AAII Asset Allocation Survey
What do these charts suggest?
This sentiment data implies that bearishness is getting very negative. Its not at the point where a rally is absolutely imminent, but we are slowly moving in that direction.
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