Each week the American Assoc. of Individual Investors produces the results of their sentiment survey. These results are widely used as a contrarian indicator when they hit extreme bullish or bearish levels. As the graph below shows, the spread between the number of bulls vs. bears has hit -22.4%, breaking past the -20% level that has previously indicated extreme pessimism. We were last below -20% in August and September ’11, right around the time a bottom was put in the major indices.
Data Source: AAII Sentiment Survey
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