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Investor Sentiment – Is It Different This Time?

Saturday, January 15, 2011. 10.30 a.m.

http://www.streetsmartpost.com/category/daily-update/




The fact that investor sentiment has reached levels of extreme bullishness and complacency usually seen at market tops has been well publicized for a couple of months. It has not resulted in a market correction, nor has the publicity intimidated investors into cooling off their enthusiasm.

Does that mean it will be different this time?

The bullishness is across the board.

The poll of its members by the American Association of Individual Investors has been in its warning zone, above 50% bullish, for some time. This week’s poll showed 52.3% to be bullish, down from the previous week’s 55.9%, but still in the warning zone.

The Investors Intelligence poll of investment advisors is at 57.3% bulls, only 19% bears. The spread, at 38.2% is in what Investors Intelligence considers to be in its danger zone (above 35%) and in fact is getting close to the all-time high spread of 42.4%.

The VIX Index, also known as the Fear Index, which measures the sentiment of options players, has been in the zone of low fear (high bullishness and confidence) seen at every rally and market peak since the 2007 market top.