As the indices accelerate to the downside — the Dow Industrials are off 240 points as I type this — its as good a time as any to look at the current market sentiment.
These provide a snapshot into when traders and investors get too greedy or fearful. Typically, you can use these measures as a useful short term metric for timing entries and exits.
And, these data points are much more reliable than the typical anecdotal sentiment discussions: "markets should selloff (rally), ’cause everyone I know is bullish (bearish)."
AAII Asset Allocation Survey
What do these charts suggest?
This sentiment data implies that bearishness is getting very negative. Its not at the point where a rally is absolutely imminent, but we are slowly moving in that direction.
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