"Individual investors historically become the least bullish at market bottoms and the most bullish at market tops."

From the Disciplined Approach To Investing, an interesting post on a topic I've recently posted on:

"Investor Bullish Sentiment Continues To Decline

The individual investor bullish sentiment indicator is referred to as a contrarian measure by investment strategist. Individual investors historically become the least bullish at market bottoms( AS NOW ) and the most bullish at market tops.

As reported by the the American Association of Individual Investors, this past week's bullishness reading fell to a level below that reported on November 20th. The percent of individual investors that are bullish on the market was reported at 24% versus last week's reading of 28.95%. The 24% level is lower than reported on November 20th: 24.37%. Since November 20th, the S&P 500 Index has risen over 15%. The bull/bear spread came in at -31% versus last week's spread of -15%.

(click to enlarge)

Data Source: American Association of Individual Investors

Sphere: Related Content

More on this topic (What's this?)

Short Term Trading System Still Not Bullish (Blue Grass Portfolio, 12/28/08)

Buying up some Bullish Stock Charts for A Change. About Time! (thetechnicaltrader.net, 12/30/08)

Technically bullish. (StockWeb, 12/9/08)

Read more on Bull market at Wikinvest

Posted by David Templeton, CFA at 11:31 AM

In my opinion, Bearish/Bullish Sentiment is an excellent gauge of the Fear and Aversion to Risk, which is still very high. It might go a little lower, meaning that a true diminution is not yet apparent.