Thursday, March 01, 2007

Investor Sentiment Check

During this mornings opening plunge, some of the fear indicators really spiked again. And even has the markets have recovered, the put/call ratios remain elevated.

The ARMS Index hit 7.99 this morning, higher than at any time during the recent bear market. Moreover, Tuesdays high of 15.98 was the highest reading in the history of the indicator.

The volatility index (VXN) hit a new 7-month high this morning, reaching 19.40. It has since settled down.

The CBOE put/call ratio is at 1.50, a hugely bearish level, and it has been above 1.0 all week.

The ISEE is also at a high level of 0.95, indicating high levels of pessimism.

Although the correction may have more time before it runs its course, I think the extreme bearish sentiment will likely limit the extent of the pullback in percentage terms.


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