Spread Between NAAIM Index And AAII Bulls In Red Zone — Risk-Reward Odds Unfavorable For Bulls, Particularly New Longs

Last week, the spread was 48.6 – NAAIM at 81.7 and AAII bulls at 33.1 percent – a 20-week high and into the red zone. For reference, in the week to March 18th, which preceded the March 23rd low in major equity indices, the spread dropped to minus 23.7 (arrow). The fear back then has been unwound, which helped stocks. The pendulum has now swung the other way – into greed territory. Several times in the past, the spread has managed to push still higher, but with each push higher risk-reward dynamics turn unfavorable for new longs in particular. 

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