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Bearish Investor Sentiment Nears Record Lows

Tyler Durden's picture




 

While it appears that the future path of globally correlated risk assets is increasingly binary (or even tertiary if we include muddle-through), the AAII has just recorded one of the lowest prints for Bearish Investor Sentiment ever. At only 17.16% of respondents bearish, this is second only to the late 2010 (QE2-inspired) trough in bearishness that soon after heralded the top in risk assets for this cycle - as the rumor rally met the news negativity. This level of bearishness is over two standard deviations from long-run norms. Almost 50% of respondents are fully bullish (which explains the retail equity outflows?) which is the highest in 9 months. The ratio of bears to bulls has accelerated to almost record levels as it seems the respondents that AAII is asking are increasingly (over) confident in their nominal returns (perhaps not so much their real returns), or perhaps believe the hype of a fiat print-fest just around the corner and see only upside for USD-numeraire stock prices (even as earnings contract and outlook downgrades persist). So the next time someone tells you that the market will rally because everyone is so negative - not so much.

Upper pane is AAII Bearish Sentiment / Bullish Sentiment ratio (inverted in black) nearing record levels and the S&P 500

Middle pane is AAII Bullish Sentiment - showing nine month highs.

Lower pane is AAII Bearish Sentiment - near record lows and over 2 standard deviations below long run norms.

Chart: Bloomberg

 

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Fri, 01/06/2012 - 10:28 | 2039015 Badabing
Badabing's picture

Smoke and mirrors, disinformation, fake numbers, print-a-thon, re-hypothecation, Ok ill invest in the market.

Fri, 01/06/2012 - 10:42 | 2039068 Alien Invader
Alien Invader's picture

As a contrarian investor who is currently short the market, I love to see news like this. When everyone is on lined up on one side of the trade, it is time to get on the other side of that trade.

Fri, 01/06/2012 - 11:57 | 2039323 CPL
CPL's picture

Yup,

 

Market is running on nothing but a credit card.

Fri, 01/06/2012 - 10:55 | 2039103 smlbizman
smlbizman's picture

no way...go check the gold chart.....nothing funny there....just thelma and louised...

Fri, 01/06/2012 - 11:26 | 2039191 SheepDog-One
SheepDog-One's picture

Insiders got the memo there will be no QE gift for stocks this year. Muddle-thru.

Fri, 01/06/2012 - 11:30 | 2039214 Comay Mierda
Comay Mierda's picture

American default 2012 baby

Fri, 01/06/2012 - 11:34 | 2039237 Alien Invader
Alien Invader's picture

dang it - i didn't get that memo:( What's the Bernanke going to do with all the printing presses he ordered? They are top quality from China part of the obamma jobs program to keep chinese gainfully employed.

Fri, 01/06/2012 - 12:29 | 2039384 Urban Roman
Urban Roman's picture

A drop of 0.11% is "thelma and louised"?

Fri, 01/06/2012 - 11:39 | 2039249 Chief KnocAHoma
Chief KnocAHoma's picture

Can someone give us an update on MF Global? Does Corzine still have a head?

Fri, 01/06/2012 - 10:28 | 2039019 tmosley
tmosley's picture

And ZH is just the opposite.  So much for the idiot troll theory that ZH is the street.

Fri, 01/06/2012 - 10:29 | 2039022 WonderDawg
WonderDawg's picture

This is extremely scary for anyone long in the market. Bloodbath to commence shortly (pun intended).

Fri, 01/06/2012 - 10:48 | 2039081 HarryM
HarryM's picture

The stage is set ...

 

Curious if we'll see the boost after Eurpope closes today

Fri, 01/06/2012 - 11:28 | 2039201 SheepDog-One
SheepDog-One's picture

Mid 2011 style short squeeze to commence in 3.....2..... oh wait there are no shorts to squeeze. Uh oh.

Fri, 01/06/2012 - 10:30 | 2039026 Hansel
Hansel's picture

Human market participation also near record lows...

Fri, 01/06/2012 - 11:52 | 2039300 you enjoy myself
you enjoy myself's picture

which is why i'm blown away that SPX has completely decoupled from EUR/USD.  either every single HFT has  simultaneously updated their algos or there's some really extra special PPT work in play.   SPX is about to go green and hit 1280.  a couple of months ago EUR/USD hitting 1.26 would have meant SPX 1000.

Fri, 01/06/2012 - 10:33 | 2039030 vast-dom
vast-dom's picture

This print was clearly pre the miracle of December job creation! Pray to The Lord Jesus Christ we have here a bonafide godsend in our new accounting and corrected and solved unemployment situation!

Fri, 01/06/2012 - 10:43 | 2039071 Tekoa Da Silva
Tekoa Da Silva's picture

Yea, thats very subtle yet big news for the gold market. Thanks for the post bnb.

Fri, 01/06/2012 - 10:31 | 2039033 francis_sawyer
francis_sawyer's picture
Bearish Investor Sentiment Nears Record Lows

I never knew there were ZOMBIE bears...

Fri, 01/06/2012 - 12:31 | 2039477 Urban Roman
Urban Roman's picture

I think we're all zombies on this bus ... go ahead, eat some brains.

Fri, 01/06/2012 - 10:32 | 2039038 razorthin
razorthin's picture

Quite a predicament Obama is in.  Allow his minions (ahem... controllers rather) to fudge the numbers so that he looks more effective and risk even more opposition to any additional QE that would be necessary for even 1% to feel any real benefit.

He's fukked.

Fri, 01/06/2012 - 10:33 | 2039039 flacon
flacon's picture

So where to park your money? US Dollars?

Fri, 01/06/2012 - 10:36 | 2039052 sabra1
sabra1's picture

canadian real estate of course!

Fri, 01/06/2012 - 12:08 | 2039378 SheepDog-One
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Sunnnyvale Trailer Park. I'm movin in with Bubbles and his kitties.

Fri, 01/06/2012 - 10:33 | 2039041 Irish66
Irish66's picture

Can you report how much money the fed is losing on the swaps?

Fri, 01/06/2012 - 10:34 | 2039043 Dr. Engali
Dr. Engali's picture

This is news I like to read. Let's get a few more bulls out there, then watch them cry on CNBC as this fucker falls even after Ben prints since there is already two trillion of printing baked in to this market.

Fri, 01/06/2012 - 12:16 | 2039410 Zero Govt
Zero Govt's picture

it's the Bloomberg crew crying today ..they've been pumping the jobs report all day then got the number,200,000 fake jobs (not really)created, then turned to the Stocks to see them all down and in the red

these CNBC/Bloomberg airheads really do believe the news moves markets

Fri, 01/06/2012 - 10:34 | 2039046 Cdad
Cdad's picture

Check your Eur/USD cross...on the weekly chart.  It is right at the breakdown zone.

Fri, 01/06/2012 - 10:52 | 2039095 Cdad
Cdad's picture

It's breeeeeaaaaking......I expect the quants will not be able to ignore this signal.   Quarter cent more and it should simply free fall.

Fri, 01/06/2012 - 11:17 | 2039161 Cdad
Cdad's picture

Here it comes.  The EUR/USD should have bounced hard off of 127.08.  It noodled off of that and is now falling back.

Fri, 01/06/2012 - 11:26 | 2039194 Cdad
Cdad's picture

Don't think the [non]markets can ignore this for much longer.  sub 127.08 now.

As well, HYG is also about to join the sell signal brigade.  Crude oil also right on an important line @ $101.12

Three macro sell signals...and counting.

Fri, 01/06/2012 - 10:35 | 2039048 RobotTrader
RobotTrader's picture

This has been a 3-year "Bear Massacre"

 

For those playing options, FAZ, TZA, etc. it was an utter disaster.

Can't blame the bears for being totally demoralized.

Fri, 01/06/2012 - 10:37 | 2039057 Irish66
Irish66's picture

I'm cranky today so shut up

Fri, 01/06/2012 - 10:40 | 2039064 WonderDawg
WonderDawg's picture

Evidently, the markets don't share your sentiment. Already in the red after the NFP "massive beat".

I'm loling.

Fri, 01/06/2012 - 10:53 | 2039099 Cdad
Cdad's picture

It's the Euro dollar....nasty, nasty signals coming from it.

Fri, 01/06/2012 - 11:44 | 2039262 YesWeKahn
YesWeKahn's picture

Overall, Bears were the winner of 2011. Those who played long and short did even better.

Fri, 01/06/2012 - 10:39 | 2039060 Awakened Sheeple
Awakened Sheeple's picture

Bob Pisani just said the market is flat because "investors realize there won't be QE3."

 

Cue crash in 3..2..1..

Fri, 01/06/2012 - 10:41 | 2039067 forrestdweller
forrestdweller's picture

maybe it's true?

that is one of the possibilities.

that we have reached the bottom of the pit and we are now slowly climbing up. 

the crisis was just something on tv, and on the internet, like a good tv show. we are now waking up.

Fri, 01/06/2012 - 10:52 | 2039094 WonderDawg
WonderDawg's picture

Yes, maybe. And maybe $700 TRILLION in CDS leveraged bets is also like a good TV show. It'll have a happy ending, I'm sure.

Fri, 01/06/2012 - 10:43 | 2039073 GolfHatesMe
GolfHatesMe's picture

Did stuxnet just hit the algos?  The market is actually down for a moment after the BS numbers.  Wires must be crossed.

Fri, 01/06/2012 - 10:45 | 2039076 DaMule
DaMule's picture

The Bernanke put is live and well

Fri, 01/06/2012 - 10:46 | 2039078 Dr. Engali
Dr. Engali's picture

Wow Robo look at this market roar on the made up data! I would have thought that treasuries would have sold off and all that money would flow into the market on the fake news from the ministry of truth, but it's the exact opposite......curious..... But hey Robo....what do we know?

I will say it looks like gold is breaking the trend. Too bad you don't have any.

Fri, 01/06/2012 - 11:50 | 2039290 greg2514
greg2514's picture

You think today is the s&p downgrade that is why market is actibg so strange?

Fri, 01/06/2012 - 11:53 | 2039302 jomama
jomama's picture

strange is the new normal.  don't blow a head gasket trying to make heads or tails of massive manipulation.

Fri, 01/06/2012 - 10:50 | 2039086 Dr. Engali
Dr. Engali's picture

Hey Robo look at that Euro/USD and still gold is up. Curious trend......probably makes one wish they had prescious metals right now.

Fri, 01/06/2012 - 10:49 | 2039087 LawsofPhysics
LawsofPhysics's picture

and apathy at a record high.  People are beat down and simply don't give a shit.  Let the fleecing commence!

Fri, 01/06/2012 - 11:13 | 2039149 mess nonster
mess nonster's picture

...whatevah...

Fri, 01/06/2012 - 10:50 | 2039088 new game
new game's picture

ot: sopa violation-

as follows...

...our hope is that in 2012, the market will finally "clear," in the sense that bad debt around the world will be recognized as bad and restructured; that overleveraged financials will be taken into receivership instead of forcing austerity on every corner of the global economy in order to make them flush again; that rates of return will rise enough to compensate and encourage saving - and high enough to encourage borrowers and other users of capital to allocate the funds productively. Of course, in order to restructure bad debt, someone has to accept a loss. In order for rates of return to rise, valuations must decline. In short, our hope is for events that will unchain the global economy from an irresponsible past and open the gates toward a prosperous future

credit to the good Dr. John Hussman

but we all know this will not happen.

call it wishthink...

Fri, 01/06/2012 - 10:57 | 2039110 new game
new game's picture

and from bill gross;

It actually began with early 20th century fractional reserve banking, but came into its adulthood in 1971 when the U.S. and the world departed from gold to a debt-based credit foundation. Some called it a dollar standard but it was really a credit standard based on dollars and unlike gold with its scarcity and hard money character, the new credit-based standard had no anchor - dollar or otherwise.

All developed economies from 1971 and beyond learned to use credit and the expansion of debt to drive growth and prosperity. Almost all developed and some emerging economies became hooked on credit as a substitution for investment in tangible real things - plant, equipment and an educated labor force.

They made paper, not things, so much of it it seems, that they debased it. Interest rates were lowered and assets securitized to the point where they could go no further and in the aftermath of Lehman 2008 markets substituted sovereign for private credit until it appears that that trend can go no further either. Now we are left with zero-bound yields and creditors that trust no one and very few countries. The financial markets are slowly imploding - delevering - because there's too much paper and too little trust.

picture clear yet?

got gold?

Fri, 01/06/2012 - 10:51 | 2039090 Outlaw Of The W...
Outlaw Of The Wasteland's picture

bob pisani says everything is alright, and that unicredit is up on the day.  carlos "ricky ricardo" quintenilla heartily agrees.

 

So.

Fri, 01/06/2012 - 10:52 | 2039093 Ben Bermonkey
Ben Bermonkey's picture

you come late, this data was published yesterday already and whats more in 2005 bearish sentiment was even far lower

Fri, 01/06/2012 - 10:53 | 2039096 BW
BW's picture

Tyler,

What is up with PSLV and SLV, an over 30% premium!?  Default anyone?

 

Fri, 01/06/2012 - 10:53 | 2039097 np1262873
np1262873's picture

German press is reporting German officials are working out the details of a Greek Euro exit

Fri, 01/06/2012 - 10:55 | 2039108 Outlaw Of The W...
Outlaw Of The Wasteland's picture

now batting Ireland..........Ireland.

Fri, 01/06/2012 - 10:55 | 2039100 RobotTrader
RobotTrader's picture

Gold priced in foreign currencies taking off again.

 

http://stockcharts.com/freecharts/candleglance.html?GLD:FXE,GLD:FXY,GLD:...|D

I'd be careful about shorting stocks when gold is so resilient lately.

Looks like "Risk On" is back on the table soon, since gold is by far the "riskiest" asset.

Fri, 01/06/2012 - 11:00 | 2039115 LawsofPhysics
LawsofPhysics's picture

yeah, assets that hold their purchasing power for 2000+ years are to be considered "risky".

Fri, 01/06/2012 - 11:00 | 2039116 tmosley
tmosley's picture

My God, it's full of doublethink.

Fri, 01/06/2012 - 11:51 | 2039295 jomama
jomama's picture

outsmarting those taking it at face value.

Fri, 01/06/2012 - 11:33 | 2039233 SheepDog-One
SheepDog-One's picture

WOW RoboTarder youve GOT to drop your maniacal obsession over gold! It is NOT your arch nemesis! 

SO you called the gold top at $900 and sold like an idiot....thats OK! Everyone makes mistakes! Well, not as bad as your string of awful market mistakes but anyway JUST GET OVER IT!

Fri, 01/06/2012 - 10:54 | 2039101 Chappy
Chappy's picture

I'm confused.  I thought nill volume meant algo ramp fest.  Is someone taking profits?  Who thinks we'll end in the green again today?

Fri, 01/06/2012 - 10:57 | 2039107 Jlmadyson
Jlmadyson's picture

Euro 1.26 next.

Bullish next.

Keep it coming.

Greek Euro exit very bullish next. Haha

Fri, 01/06/2012 - 10:59 | 2039114 Bansters-in-my-...
Bansters-in-my- feces's picture

Off topic but important info. Check out whats just went on with silver. The lease rates are showing NEGATIVE on the one year and the 6 month,while just yesterday they were like almost PLUS one %. The chart does not match the data they are showing but Nadler does this deception in case you just look at the chart,Ive caught him and called him on it before.

Then look and see what spot silver just did on the spot chart.

FUCK YOU'S PPT.

Fri, 01/06/2012 - 11:02 | 2039122 LawsofPhysics
LawsofPhysics's picture

Links please, this is a sign many of us have been waiting for.

Fri, 01/06/2012 - 11:04 | 2039129 sbenard
sbenard's picture

John Hussman, Phd. of Hussman Funds makes the case here...

http://www.hussmanfunds.com/wmc/wmc111219.htm

...that strongly bullish sentiment iss actually a sign of imminent reversal because the market becomes OVERconfident and ignores the risk signs, thus setting up a negative shock.It uses the Citigroup economic surprise index that almost always reverses at the levels where we find ourselves currently.

Note the graphic (2nd one down) that shows this index. We are at the most extreme level in months, and are now primed for a negative shock that will send the market collapsing, and its all precisely because bullish sentiment is so bloated.

Fri, 01/06/2012 - 11:10 | 2039140 bbelux
bbelux's picture

Anyone looked GOLD today? You guy's have to realize that long EUR means long GLD... At least in the short past...

 

So who's long EUR here?

Fri, 01/06/2012 - 12:44 | 2039534 ActionFive
ActionFive's picture

Long EUR means long stocks.. At least in the past...

Anyone looked at stocks today? Correlations?

Fri, 01/06/2012 - 11:14 | 2039150 jmac2013
jmac2013's picture

What about all the equity outflows?  Could those be the bears who have left the market, therefore don't get counted in this survey?  Hard to believe that bearish is the contrarian outlook, especially if you talk to the average joe on the street.

Fri, 01/06/2012 - 11:21 | 2039171 yogibear
yogibear's picture

Oil should be higher. Given the Iran situation and jobs numbers oil should be flying.

Fri, 01/06/2012 - 11:30 | 2039215 SheepDog-One
SheepDog-One's picture

'Markets to rally due to the funereal negativity everywhere'...

Huh, all I see on the MSM is euphoric anchorettes queefing out double sparkle rainbows while riding unicorns.

Fri, 01/06/2012 - 12:02 | 2039350 Stuck on Zero
Stuck on Zero's picture

I take it that these numbers are for American investors only.  I suspect you would get different ratios for European investors.

Fri, 01/06/2012 - 12:33 | 2039484 rosiescenario
rosiescenario's picture

If actual humans making investment decisions were moving the markt, then bullish : bearish sentiment might have some predictive use.In the reality of today, it is just one more quaint concept, joining the ideas of Graham & Dodd in the dust bin of history.

Fri, 01/06/2012 - 18:45 | 2040912 Chasecran
Chasecran's picture

Voting with words and with money are two different things. 

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