Once again, there continues to be a lack of any extreme in bullisness from these guys despite the fact that the market is sitting near 52 week highs. The other sentiment survey I follow, Investor's Intelligence (II) is in fact however showing extreme bullishness with a 3:1 ratio of bulls over bears. So, who do you believe with respect to the contrarian message?
I go with AAII because II sentiment tends to be usefull for the longer term and tends to show extreme bullishness during the first rally of a new bull run without any serious bearish consequences. In fact, it's been showing a bull to bear ratio of 2 or more since early August and yet here we far comfortably above those levels. This happened during the 2003 bull market rally as well wherby there was extreme bullishness all through the spring and summer. Also keep in mind where we are comming from...II sentiment was showing extreme bearishness (often times off the charts) for the last 7-8 months of the bear market and so now we are unwinding this bearishness.
Also as per what I said before, in bull markets bearish contrarian omens can either be ingorned or resisted for quite some time but any bullish ones tend to support the bull run almost immediately.
The best trio of indicators have been rydex, put/call ratio and AAII sentiment and so I'll continue to focus on them untill they don't work anymore.
The ST is tricky right now. Ultimately I think we go to 1150+ before the end of the year but there's still this week's unfilled gap to deal with which makes the next 1-3days very tricky.
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