April 20, 2007, Newsletter Issue #63: Sentiment Surveys

Tip of the Week

Surveys of the bullishness or bearishness of investors make for excellent expectational readings at extremes, as excessive bullishness means that buying has already mostly occurred and the risk of a negative surprise is heightened. If pervasive bearishness among investors exists, even bad news wonīt necessarily cause the market to go down any further since the selling has already occurred in advance of this news. Investors Intelligence and the American Association for Individual Investors (AAII) are two of the major sentiment polls. Investors Intelligence is a survey of sentiment taken of investment advisors on a weekly basis. The results are reported as percent bullish, percent bearish, and the percent that are expecting a correction. Edited by Michael Burke, this sentiment poll can be found at www.chartcraft.com. The AAII (www.AAII.com) polls individual investors to gauge whether they are bullish, bearish, or neutral. In addition, these polls are available each week in Barronīs, and the latest Investors Intelligence poll is updated weekly in Investorīs Business Daily.

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