II Survey Shows Overheated Sentiment
While extremely bullish sentiment does not always call tops it has never, at least to our knowledge, ever called a bottom either. Looking at the chart below of the Investors Intelligence Bull Bear Ratio along with its 13-week (3-month) moving average you can see that not only has sentiment risen as fast as the market but it is at highs not seen since 2004. While this is not necessarily a sign of a market crash like some would lead you to believe we do think that the current situation warrants caution. We are currently not selling off our long positions but we are holding off from most long opportunities right now. (Click on chart twice to enlarge)
Investors Intelligence Bull Bear Ratio
Happy Trading,
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