AAII Sentiment Rebounds

Bullish sentiment among investors rose this week, according to the weekly online survey of members of the American Association of Individual Investors. Bullish sentiment rose to 49.03% from 42.53%, while bearish sentiment fell to 27.74% from 31.61%. The percentage of investors who described themselves as neutral on the stock market fell to 23.23% from 25.86%.

So this week we definitely got a strong rebound in bullish sentiment thanks to the continued rally in the markets. Historically when you have bullish sentiment at or around 50%, the market is nearing a top. That does not mean it has to happen this time, but generally it is safe to say that right now is not the ideal time to be buying stocks. In a perfect world you want to be buying when the retail investors are scared and bullish sentiment is below 25%.

Here is a short term chart of AAII Sentiment.
 

Here is a 1 year chart which compares AAII Bullish sentiment to the SP 500.



Next is a chart comparing AAII bearish sentiment with the SP 500.

Enjoy.

Black Swan Insights

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AAII Sentiment Down Again --9/30/2010
AAII Investor Sentiment Declines --9/23/2010

AAII Sentiment Rebounds