Friday, January 01, 2010

Investor Sentiment Suggesting Caution

This week's investor sentiment reading reported by the American Association of Individual Investors is suggesting individual investors might be getting too bullish.
  • bullish investor sentiment is reported at 49.18% this week. This is the highest level since 51% was reported on August 13, 2009.
  • bearish sentiment is reported at 22.95% and is the lowest bearishness reading since 22.31% on February 27, 2007.
  • the bull/bear spread is reported at 26% and is the widest spread since 28% was reported on May 8, 2008.

As noted in yesterday's post, Markets And Their 200 Day Moving Average, the market in 2010 will likely be more of a stock pickers market than one where a rising tide lifts all markets. Focusing on those stocks that have not become extended from a valuation perspective will likely generate better returns in 2010.

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