A thousand point drop for the Dow in less than a month will do that. Retail investors aren’t so bullish when their favorite stocks are getting destroyed. Portfolios look much different today than they did just 10 days ago. And that type of action gets our attention.
For the week ending 11/14/12, just 28.8% of investors polled were bullish on the stock market for the next six months. The average historically is closer to 40% bulls. But the most interesting thing to us was that this was the largest week over week drop in bullish sentiment since May. If you recall, the stock market bottomed out on the 2nd trading day in June. I don’t think that’s a coincidence.
We like to look for extreme readings in either direction as a contrarian indicator for stocks. This is one thing (finally) that we can look at as a positive for equities. But there are still a lot more check marks on the side of the bears. Let’s see how these polls come in next week. Something tells me there could be even less bulls…