Sentiment is far from Overly Optimistic
With S&Ps closing on Wednesday less than 1.5% away from all-time highs, the bulls are still few and far between. And we've seen a lot of this sort of thing throughout the 2013 rally. I think this is overall a good thing for the health of this market. Normally with markets breaking to historic levels, you're likely to see a more euphoric crowd. But not this time.
This week's AAII poll came in with just 34.5% bulls, which is well below average and the July highs of 48.94%. This actually marks a six week low in bullish sentiment. All while US stocks are ticks from historic highs. That I find interesting. Here's the chart:
So big picture, I think this lack of enthusiasm from the bulls is very healthy. Shorter term I still think this is what is most important. These sentiment polls are very noisy and have plenty of ups and downs. So from a trading perspective, there are levels we're watching and trading against. But I don't think we can ignore the overall health of the market when bulls can't be convinced at all-time highs.
Sources:
AAII Weekly Sentiment Polls (8-14-13)
Tags: $SPY $XLF