DrBob: Investors Intelligence Poll
Now that you mention it, that big spread between the bulls and bears is rather discouraging. Courtesy of an amateur-investors link back on your old raging bull board, it appears every intermediate-term rally(on the order of at least a month or two), started only after the spread narrowed to around 15%. Over the past 12 months, the quickest that ever happened from Investors Intelligence levels similar to now was in late December, where the spread went from around 30% to 15% in just under two weeks.(VIX got to mid 30s then) Perhaps we would need to see bulls-bears get to 45-30 and VIX get to at least the low 30s. Most likely this would involve lower reaction lows on the averages. In late Decenber, the S&P 500 had to drop 8% to narrow the spread 15% down to 15%. That would mean the low 1100s in the S&P cash. But perhaps if we had Japan or Argentina shocks combined with triggering the stop-losses under Nasdaq 1935 and under Dow 10,000 and maybe around 1140 on the SPX, then we could generate enough fear for a good rally.
The other three polls(AAII, Consensus, Market Vane) seem to have bullishness readings too low to have a sustained decline to new lows(Nasdaq 1600 and Dow 9100) without a sharp intervening rally. That's why I support the bungee-jump theory just below Dow 10,000 and perhaps Nasdaq 1850-1890 or so then a big rally to reset these three surveys back to neutral-bullish levels. Of course, always best to wait for confirmation on the shorter-term technicals and put-call ratios to back things up.
So it seems small intermediate-term rallies need a spread of around 15% while bigger more forceful rallies result from the percentages of bulls and bears being roughly equal.(late 1998, late 1999, and March 2001) |
