Peter Boockvar on sentiment this morning:
As we all know that higher stock prices brings out more bullishness, Investors Intelligence reported that its measure of Bulls rose to 54.4, thehighest since April 2015 vs 52.5 last week.II considers anything above 55 as the “danger level.” Bears fell to a one month low at 23.3, down by 1.4 pts w/o/w. The bull/bear spread of 31.1 is the now at the most since July 2015. Those expecting a Correction fell .5 pt to 22.3, the lowest since June 2014. We now have a buffet of extreme bullish sentiment as this data joins the CNN fear/greed poll which closed yesterday at 87 after touching 91 on Monday (it can’t go above 100). The VIX yesterday closed at its lowest level since December 2014 and is just a few pennies from a two year low. The AAII bull/bear spread as of last week is the widest in 4 months. Bottom line, the sentiment rubber band is now stretched but that doesn’t mean the rally just ends here, it could keep on going. That said, the trade is now very crowded and I’ll ask again, is the rally post UK vote plunge just a yield driven price chase or is it discounting something fundamental? The former will be fleeting, the latter would not be.
Josh here – he has a point. But I’ve seen true sentiment extremes, and this ain’t one of them when you pull back the timeframe and look at a longer-term rolling average, say 6 weeks or 10 weeks.
Managing Director, Chief Market Analyst
The Lindsey Group LLC