I still believe we are headed for a test of the 200 day moving average at S&P 1253.47. That may not even hold but the line beckons there like a neon sign. But I don’t think it will happen next week. In fact I think we are close to a bounce. As you may have noticed from our tweet this morning, we were quite active buying stock. Not all of the ideas worked today but a surprising number did. Two reasons I believe we may be a near a short-term bottom is that the 7 day RSI is not confirming the downward magnitude of Friday’s decline. Also there are just a lot of bears and that is usually ripe territory for a bounce. One vague word today about the financial cap ratios major banks must have turned one of the worst performing sectors into the best. When stocks can turn like that, it means they are either overbought or oversold. The individual investor survey is also very bearish based on historical norms. The AAII Investor Sentiment Survey measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market for the next six months; individuals are polled from the ranks of the AAII membership on a weekly basis. Only one vote per member is accepted in each weekly voting period.
Survey Results
Sentiment SurveyResults
Week ending 6/8/2011
Data represents what direction members feel the stock market will be in the next 6 months.
Bullish
24.4%
down 5.8
Neutral
27.9%down 8.5
Bearish
47.7%up 14.2
Change from last week:
Bullish: -5.8
Neutral: -8.5
Bearish: +14.2
Long-Term Average:
Bullish: 39%
Neutral: 31%
