Investors Intelligence Sentiment Survey Data & Charts

Investors Intelligence (II) Sentiment Survey Data and Graphs

Data for November 10, 2010:

• Bulls = 48.4%
• Bears=23.1%
• More about Investors' Intelligence Bull Bear Survey

My charts below showing the “Investors Intelligence Survey“ or IIS and its moving averages currently say now is a good time for a market correction. On September 22, 2010 with the S&P500 (quote and charts) at 1,134 I wrote on the sentiment page of my newsletter:

"Sentiment made a lower low last month while the market made a higher low. This divergence is probably due to noise in the readings but the odds continue to favor saying the low for the S&P500 is in at 1010.91 given the quick recovery in sentiment and slowly improving economic data. It was good that many of my stocks fell into my buy zones during the latest pull-back. I added shares and now I have nice gains for the portfolio overall from those buys. The 4-week moving-average (MA) suggests the market can work significantly higher in the weeks ahead until that reading gets into my “profit taking” caution zone...."

As you can see from the first chart below, with the S&P500 now at 1211, sentiment is much better  than it was on Sept. 23.  It is also "stacking up" which often precedes a market correction.  I've taken profits and will take more profits if we go higher, but I am ready for a correction should it occur.

Chart of Bulls / (Bulls+Bears) vs. S&P500 for 11/10/10

from 1998 to now 

click images for full size graphs

More about the Investors Intelligence Survey:  One of the oldest weekly sentiment indicators is the “Investors Intelligence Survey“ or IIS. A chart of the Investors’ Intelligence Survey (IIS) “Bulls over Bulls plus Bears” versus the market is a key sentiment tool for stock market technical analysis. The IIS began in January 1963 by A.W. Cohen and has been published every week ever since. Cohen was surprised to find out that the newsletter writers, just like average investors and speculators, were usually wrong at major turning points!  Cohen found the best time to go long the stock markets was not when the most advisers were bullish, but when they were bearish! Cohen’s IIS survey turned out to be a wonderful contrarian indicator!

Chart of Bulls / (Bulls+Bears) vs. DJIA for 11/10/10

from 1970 to now 

More about

• Investors' Intelligence Bull Bear Survey
• Sentiment Indicators
• Kirk's Two Investment Letters

Investors Intelligence Sentiment Survey Data & Graph

Investors Intelligence Sentiment Survey Data and Chart

One of the oldest weekly sentiment indicators is the “Investors Intelligence Survey“ or IIS. A chart of the Investors’ Intelligence Survey (IIS) “Bulls over Bulls plus Bears” versus the market is a key sentiment tool for stock market technical analysis. The IIS began in January 1963 by A.W. Cohen and has been published every week ever since. Cohen was surprised to find out that the newsletter writers, just like average investors and speculators, were usually wrong at major turning points!  Cohen found the best time to go long the stock markets was not when the most advisers were bullish, but when they were bearish! Cohen’s IIS survey turned out to be a wonderful contrarian indicator!

Data for Aug. 25, 2010:   

• Bulls = 33.3%
• Bears=31.2%

• More about Investors' Intelligence Bull Bear Survey

Chart of Bulls / (Bulls+Bears) vs. S&P500 for 8/25/10

click for full size graph

More about

• Investors' Intelligence Bull Bear Survey
• Sentiment Indicators
• Kirk's Two Investment Letters

Raw Data

Date Published	Percent Bullish	Percent Bearish
08/25	33.3	31.2
08/18	36.7	31.1
08/11	41.7	27.5
08/04	38.9	33.3
07/28	38.2	34.9
07/21	35.6	35.6
07/14	32.6	34.8
07/07	37	34.8
06/30	41.1	33.3
06/23	41.1	31.1
06/16	37	32.6
06/09	38.5	31.9
06/02	39.8	28.4
05/26	39.3	29.2
05/19	43.8	24.7
05/12	47.2	24.7
05/05	56	18.7
04/28	54	18
04/21	53.3	17.4
04/14	51.1	18.9

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 152% (a double plus another 52%!!) vs. the SandP500 UP a tiny 5.7% vs. NASDAQ Comp  down 0.6%!   (All through 8/22/10)  More Info

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A Tradeable Bottom at Hand?

Many of my charts say the market may be in the process of making a tradeable bottom. In late 2009 and early (January) 2010 I took profits in my equity positions in both my personal and newsletter explore portfolios. Now I am back to buying as some of my stocks have fallen to their "repurchase levels."

Investors Intelligence Bulls over Bulls plus Bears Chart

Charts of the AAII (American Association of Individual Investors) Bulls minus Bears Index versus the market are key sentiment indicators for stock market technical analysis. Contrarian theory states the time to buy is when fear and pessimism are at a maximum since this usually occurs near market bottoms.

Click all graphs for full size images

You can clearly see from my chart of the Investors Intelligence Bulls divided by (Bulls+Bears) ratio plotted with the S&P500 weekly close over time that the level was at near record levels between four and ten weeks ago when I was taking profits. Now it has fallen enough to start accumulating again, which I have.

More about Investors' Intelligence Bull Bear Survey

Rydex Nova/Ursa Ratio

This chart courtesy of schaeffersresearch.com shows the Rydex Nova/Ursa Ratio. This is one of the charts I find useful for my contrarian analysis to find good times to buy and sell equities.

The Rydex Nova/Ursa ratio is the ratio of the funds invested in Rydex bull funds divided by funds invested in Rydex bear (Ursa) funds. When investors who trade these funds are bearish, the ratio falls. As a contrarian, I like to do the opposite so I have been buying some stocks back for my newsletter explore portfolio that I took profits in recently at higher prices.

Here is a Rydex Nova/Ursa Ratio chart courtesy of "Sam" back to 2005:

I like to add to equities when most are bearish and the Rydex Nova/Ursa ratio falls. Likewise, I like to take profits when others are bullish and the ratio is high.

"Kirk's DOW CLX Model"

Click all graphs for full size images

This chart is very "busy" but you can see the lime green signal line has given some timely buy and sell signals. The last two signals were

• Jan 7, 2010 SELL at DOW 10,618
• Feb 8, 2010 BUY at DOW 10,058
  

Summary:

The above charts and several others I follow are bullish and saying it is a good time to buy. I like to add to equities when most other investors are bearish. Likewise, I like to take profits when others are bullish.

Market Timing Disclaimer: No sentiment indicator, or any indicator for that matter, is 100% reliable. I look at sentiment as head winds and tail winds. When sentiment is terrible, then it acts like a tail wind for your returns where you could see further declines, but long term, it is best to be buying when most others are selling. Likewise, if we see sentiment get too bullish, then I would consider lowering my portfolio asset allocation. It seldom pays to be buying stocks when EVERYONE is talking about stocks and how much money they are making at cocktail parties.

In addition, I am not market timing but for a small portion of my newsletter explore portfolio. I use market-timing indicators to tell me it is a good time to buy so I can add to positions when the market is down and thus help me overcome my fear to rebalance back to my target asset allocation. Likewise, when the market-timing indicators are saying to sell, they usually come when the markets are high where I want to be taking profits. The market timing indicators at market highs help me get over my greed and take profits. Now and then, I may make an asset allocation adjustment when the Fed Model and some other things I follow say the market is over or under valued. Some call that market timing, but I have stayed pretty close to 70:30 equities-fixed for many years despite the Fed model.

More about

• Investors' Intelligence Bull Bear Survey
  
  
• Sentiment Indicators
  
  
• Kirk's Two Investment Letters

Investors' Intelligence Bulls-Bears vs. DJIA Graph for 09/22/07

This chart shows the 52-week moving average of the “Investors Intelligence Survey“ bulls minus bears data. 52 weeks removes seasonality from the number and gives startling results.

Click to view larger pdf graph

I explain what this sentiment indicator and others mean to me in my newsletter. I post them here to share for all to read and make comments. Request Invitation to facebook discussion group where we have a "Sentiment" topic to discuss the weekly data.