Investors Intelligence Survey

The following two charts (supplied by Market Harmonics) seek to understand the bullishness versus the bearishness of market investors as measured through a survey of market newsletter writers by Investors Intelligence.

Each week the service Investors Intelligence surveys some 140 financial newsletter writers to determine whether they are leaning bullish or bearish in their opinions to subscribers. The resulting Investors Intelligence Survey compiles the data to arrive at a weekly percentage of bulls v.s. bears. The Survey is considered a contrarian indicator, since extremes in either direction are signals of reversal of the market’s current trend.

The first chart is a ratio chart (above), that applies a Fibonacci support/resistance grids as guides. For us, this is the most important. A rising trendline means bullish sentiment is outpacing bearish sentiment. The 2.00 area is associated with bullish extremes and market tops, and the 0.60 area with bearish extremes and market bottoms.

This next chart is just the percentage of bullish newsletter writers versus bearish ones. Note that the difference between the sum of the Bulls and the Bears subtracted from 100% is the newsletter writers who are on the fence. That usually means they are in the correction camp (regardless if it's a pull back in a bull move or a bounce in a bear move).