Results Week ending 4/10/2013 Data represents what direction members feel the stock market will be in the next 6 months.
The latest AAII Bull Sentiment Survey, pictured above, had only 19.3 % bulls, marking its lowest reading since March 5th 2009.
The V-shaped move off of the selling we saw last week has been impressive, though not unprecedented since March 2009. However, for every time traders tried to front-run an immediate recovery to new highs off the kind of heavy selling and price action last week, there have been plenty other times those traders have been chopped up or punished. Thus, the risks have been elevated.
Part of the reason which may explain the sharp recovery to new highs this week is sentiment. If too many are looking for a correction, then it becomes increasingly unlikely to occur, at least on the type of time schedule most expect. Furthermore, it is tough to arrive at a major top with so many bearish.
True, sentiment surveys are categorically not the end-all-be-all, and carry their own margins of error. But it is tough to argue with these numbers as a general proposition.Twitter