According to the latest sentiment survey conducted by the American Association of Individual Investors (AAII), 28% of respondents were bullish, 28% were bearish while 43% were neutral. ... the highest level of neutrality in more than 10 years.
Investors have been essentially neutral for the past 13 weeks according to the AAII poll. You’d have to go back to 2012 to see a similar stretch of neutral readings. All that the neutral sentiment backdrop tells us is that investors have been driven to the point of indecision by the lack of directional movement in the stock market.
If investors lose interest and volume and volatility shrink while the major uptrends remain intact, it’s probably a safe assumption that the path of least resistance still remains up. In other words, it’s not usually safe to bet against a trading range market while the bull market persists. Only when the key trend lines have been broken to the downside are we safe in assuming that the bears have taken control of the market.
Cliff Droke, Momentum Strategies Report, www.clifdroke.com, 707-282-5594, May 9, 2014
