AAII Sentiment Elevated

The ratio of bulls and bears in the latest AAII sentiment survey is unhealthy for the stock market on the short-term view.  In fact it is as close to as unhealthy as it gets during the cyclical bull out of 2009.

Sentimentrader has a cool new chart engine that allows you to dial back a chart to historical views.  This one shows a declining trend in sentiment during the Greenspan era cyclical bull (2003-2007) and a rising one on the current cycle.  This one may be destined for higher highs in sentiment before it flames out.

But the recent cluster of spiking activity is sufficient to get a good correction going in the interim.  That said, over bullish sentiment is a condition of a top, not a directive.

 

Here’s the up close (2014) view showing a level of 73, nearly matching the one that brought the January market disturbance.