Bearish Sentiment Ticked Higher Last Week

I have been focused a lot of the downside risk in the market lately, but I always like to look at both sides of the equation. On the bullish side, bearish sentiment ticked higher last week, which means there is still plenty of room for bullish sentiment to enter the market and push stocks higher.

Here are a few examples:

• The bull/bear spread on the Investor's Intelligence survey declined to -2% (more bears than bulls)
• The spread on the AAII survey declined to -6%
• The spread on the Ticker Sense blogger survey fell to -31%, its 2nd most bearish reading this year
• The public short ratio hit 72.9%, just shy of its 73.1% record a couple of weeks ago
• The Rydex Nova/Ursa ratio, which measure funds flowing into Rydex's bullish or bearish funds, hit 0.60. This is the most bearish reading since August '07.

So bearish sentiment certainly ticked higher last week, and could have quite a way to unwind. Tech stocks, and growth stocks in general, are lagging today and the distinct lack of leadership in the market keeps me a bit cautious here. But if the market continues to consolidate at these low levels, without breaking the July lows, it could set up nicely for a much needed year-end rally.