AAII Sentiment – Bearish Tilt At All Time High

Computerized Investing (a newsletter from the American Association of Individual Investors) released their March 5, 2009 sentiment survey results yesterday, just in time for a huge counter-trend rally! 

This week’s survey results saw bullish sentiment fall to 18.92%, below its long-term average of 39.0%. Neutral sentiment fell to 10.81%, below the long-term average of 31.2%. And bearish sentiment rose to an all time high of 70.27%, above the long-term average of 29.8%.

Cowabunga!  After today’s +6.4% move on the S&P 500, will this be viewed as the turning point?  Then again, the S&P 500 last traded at this level (719) just four days ago!!  What a wild market.  Note, we’ve pushed the indices down so much, 379 pts on the Dow Jones Industrials becomes a +5.8% move in one day.  The law of small numbers now works for you. 

Be mindful of the previous support level for the broad market; S&P 740 area.  That now becomes resistance.  If the market can power through that level, there may be more upside ahead.  With sentiment so low, and stocks well off their 200-day moving averages, we’ve been set-up for a rally for quite some time.  What we have noted time and time again is how surprisingly long (and disturbing) it has been since one would have expected an over-sold rally to have already occurred.   When the discussion turns to 666 being the official bottom, and it’s onward and upward from here, recall the following:  These are not normal times.