Is the general public temporarily cooling towards stocks? This week’s AAII survey shows 42.8% bulls and 29.6% bears, a gap of 13.2%. A fortnight ago, the gap was more than double that. There are two ways of reading this. First, it is healthy that the reading is no longer at stretched extremes. Second, that cooling sentiment is a harbinger of a correction. At past short-term highs, punters have shown some predictive ability from time to time. I tend towards the first of these interpretations for now.
For now, I seek further longs in Dow and the S&P 500, but continue to ignore the Nasdaq 100.
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Please note that the next edition of Wall Street Outlook will appear on Monday 11 February.