I’m starting to see talk about the bull/bear sentiment ratio. Here’s what IBD had to say:
While there’s plenty of hand wringing on TV and in print about the market, investment advisers have turned confident — perhaps too confident. Bulls jumped to 55.8% as bears retreated to 24.4%, Investors Intelligence said. It called the gulf between bulls and bears a “very, very scary reading.”
The indicator works fairly well at market bottoms. But it has a hard time flagging major tops or even intermediate corrections.
There have been only 12 instances in more than 15 years in which the percentage spread between bulls and bears has been greater than on Wednesday. Yet only one — July 24, 1998 — occurred before a serious sell-off. Minor corrections of 5% or less and sometimes new highs followed the others.
Here’s a TheStreet.com article discussing sentiment. (Thanks for pointing this out Duru.)
