Investor Sentiment: An AAII Index Review for 2-10-2011

Sentiment was reported today and the results are interesting. Sentiment is not off the wall Bullish or Bearish. It is at a level that could support a further rally, but the number of Bulls may make the market vulnerable to a correction based on an outside event.

The Bulls were at 49.4% and the Bears at 26.9% for a Bull-Bear Spread of 22.5%. I look for a spread of around 30 to say the market will likely either immediately pull back or lose all gains accrued from that point forward. 22.5% is very wishy washy. It shows that investors remain somewhat skittish, possibly due to the Egyptian situation. Skittishness without a “blow-up” event from left field is not a problem for the market. In fact, the market likes some nervousness as it climbs the so-called “wall of worry.”

CONCLUSION: Sentiment at these levels is not a problem for the market. It will become an issue if the Egyptian situation is resolved and investors become complacent enough to drive the percentage of Bears down to around 20%.

By the way, my SP500 tracking newsletter is out this weekend and its FREE, so please subscribe below if you are concerned about where the stock market may go from here:

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Standard Disclaimer: Remember, it’s your money and your decision as to how to invest it.

You can find the raw data here:
AAII Investor Sentiment Survey”

Copyright © 2011 by Wall Street Sun and Storm Report, LLC All rights reserved.

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