Thursday, March 19, 2009

Bullish Investor Sentiment Spikes Higher

It is amazing what one positive week in the equity markets can do for investor sentiment. Over the seven trading days ending on March 18th, the S&P 500 Index ($INX) is higher by more than 17%. True to form the American Association of Individual Investors reported investor bullish sentiment increased by 17 percentage points to 45.06%. The bull/bear spread came in at a positive 7% versus last weeks -27% and the week prior to last the spread was -51%.

investor sentiment bull bear spread table March 19, 2009
(click to enlarge)

bullish investor sentiment chart March 19, 2009Source: American Association of Individual Investors

The AAII's sentiment indicator tends to be a volatile one on a week to week basis. However, the magnitude of the switch from bearishness to bullishness s worth noting. Could this lead to the record level of sideline cash finding its way into the equity markets?

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