Investor Sentiment Update
Amazingly, the put/call ratios are again in extreme territory.
The CBOE put/call is running at 1.25, above the 1.0 level for a record 18th straight day. The ISEE is at 91, another below average level. And the ARMS Index hit 1.46 today. It has been registering high readings all week.
Last year, we saw extreme readings in the put/call ratios, setting records. At the time, the bears were calling for an end to the bull market; oil was hitting $80; there was a British terrorist plot; Israel was on the brink of war; and the U.S. was threatening sanctions vs. Iran.
Those record readings in the fear guages ultimately turned out to be an excellent buying opportunity. So let's look at the current readings compared to what we saw last summer:
- The 10-day CBOE put/call hit 1.32 this week, a record (my data goes back to 1995). The record from last May was 1.22.
- The 10-day ISEE hit a record low 88 yesterday, the lowest reading since its inception. The previous record low from last September was 94.
- And the VIX, on a weekly basis, rose 75% back on the week ending 3/2/05. This is higher than any weekly readings for the past several years.
I don't know if we've seen the ultimate low in the market already. And most stocks usually take a few months to form solid bases before they blast out of their corrections. But I am confident that we will look back on this phase as another very good buying opportunity. I just don't think this is how bull markets end, and I have history on my side.