Thursday, September 17, 2009

Bullish Investor Sentiment Above Long Term Average

The bullish investor sentiment reported this week by the American Association of Individual Investors shows bullish sentiment increased to 42.14%. This is above the long term average of 38.94%. This week's bullish reading was higher than last week's level of 37.3%.

The forward six month return from March 19, 2009, which was near the low for the bullish sentiment reading in this cycle, has now begun to turn lower. With this week's reading of 42+%, could the market be approaching a topping out level if we anticipate future six month returns? From a pure technical perspective, the bullishness reading is not at an extreme, but a cautious investment approach is probably warranted at this time.

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