Investor Sentiment

The principles of Contrarian Investing hold that when the vast majority of people agree on anything, they are generally wrong. Otherwise no market would function because there is simply no minority with money enough to make a majority rich. A true contrarian, therefore, will first try to determine what the majority are doing and then will act in the opposite direction.

Market Vane and AAII

Market Vane and AAII are all contrary opinion indicators. Charts are updated weekly but historical charts don't necessarily show the right date because of the 5 years time span (interval 28 days).

A unique feature of Market Vane's Bullish Consensus numbers is a weighting formula applied to the various market letters. More weight is given to letters with a larger following and less weight to those with fewer readers. Each week a poll of market letters is taken to determine the degree of bullishness or bearishness among futures professionals. The theory is that when a significant number of participants are bullish, they are already positioned on the long side and there is little potential buying power left. If most participants are bearish, selling pressure has reached an extreme and prices will reverse to the upside.

Market Vane, AAII and Investors Intelligence, Market Vane's Bullish Consensus

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American Association of Individual Investors (AAII)

Thanks to the Internet, the AAII now polls its 170,000 members daily. Respondents indicate how they feel about the market's performance in the next six months. The chart below shows the number of bulls divided by the number of bears. A 4-week moving average is applied to smooth out the swings. High readings appear near market tops and low readings near bottoms.

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The Global Futures Sentiment Index is calculated according to a proprietary formula of Global Futures. A 4-week moving average is applied to smooth out the swings. High readings appear near market tops and low readings near bottoms.

Chart S&P 500 Chart Dow Jones

Historical data

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Past performance does not guarantee future results!