Source: www.dailygraphs.com
Weekly Stats: S&P 500 +5.3%, Nasdaq + 5.0%
Last week the broad based US indexes moved higher and had their best week in a year, up 5%. The market is in a corrective phase as can be seen in the chart above but last week it drop slightly under the technical support line, found support and rallied strong. Buyers stepped in and supported this market. The AAII sentiment survey which is a weekly poll that gauges overall investor sentiment dropped significantly as well. (see chart). In fact, the ratio of bears to bulls is 3:1 and is at levels reached at the March 2009 bottom. This tells us there is a large level of skepticism by the “herd” (average investor) at the lows of this correction. When there is that much fear and pessimism by the average investor the market usually does not start a new bear market cycle or decline. From a contrarian point of view when at these extremes the market usual finds support and turns higher. I will continue to use this weakness as a buying opportunity and get long term growth investors diversified in strong sectors. Have a great week.
Source: sentimentrader.com
