Investor Sentiment Checkup

I am hearing more and more how bullish everyone is. Today, the CBOE put/call ratio is running slightly below average at 0.80. The ISEE also is hitting bullish levels, hitting 237 at the open. This is the first reading over 200 in quite awhile.

Interestingly, the most recent Investor's Intelligence poll showed the bull/bear spread increased only slightly to +26 (52% bulls, 26% bears). That's only a moderately bullish reading.

At the end of last year, the spread was +39. And over the last few years, it has hit readings above +40 before the market has topped. So we are certainly not there yet, at least for this indicator. And you can make the same case for the AAII survey.

So I continue to feel that pullbacks will be mild, and are okay to be bought until we truly reach levels that show excessive optimism again. I think the reason why it is taking so long to reach said levels is merely due to the fact that bearishness had grown so pervasive, reaching all-time records by some accounts.