Thursday, October 09, 2008

Investor Sentiment Has Further To Fall

For the last few weeks I had not looked at the individual investor sentiment reading from the American Association of Individual Investors. I was surprised to see that the bullish sentiment reading was not at a lower level, i.e., like in the 20% range. Historically, individuals are the least bullish when the market reaches a bottom and is about to rally.

The bullish reading for the reporting period ending 10/9/2008 is 31.47% versus last week's reading of 33.33%. Earlier this year, July, the bullishness level was in the low 20's. On the other hand the bearish reading increased to 60.84% versus last week's level of 55%. The last time the bearish percentage was at 60% or higher was October 19, 1990.

(click chart for larger image)

After the last few days, maybe this reading will finally fall into the low 20's.

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