Retail Traders Are Bullish According To AAII Survey

The American Association of Independent Investors released its weekly survey of retail traders. Bullish sentiment rose to 49.6%, up from 47.1%. Bearish sentiment declined 2.5 points to 25.2%, down from 26.8%. The number of investors describing themselves as neutral was down slightly to 25.2%.

Historically, a number of 50% or more has marked tops in the stock market. Furthermore, bullish sentiment has been elevated for an extended period of time indicating that retail traders are very bullish. Since this is a contrarian indicator, it would suggest that now is not the best time to be long stocks. That being said, AAII sentiment has not been very helpful during the last 4 weeks. It has remained extremely bullish for some time and yet the market has continued to climb. 

Here is a short-term chart of AAII sentiment.

Click chart for larger image.


Here is a longer term chart which compares AAII bullish sentiment with the S&P 500

Here is a chart which compares AAII bearish sentiment with the SP 500.

Black Swan Insights

Related Articles:

AAII Sentiment Down Despite Strong Market--Oct 14,2010
Marc Faber's October Outlook


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