New All Time High in AAII Bearish %

Click on Chart to Enlarge

The chart above is a screenshot from Sentimentrader.com showing the last few years of data of the bearish respondant percentage from the weekly American Association of Individual Investors survey. Notice the huge spike below the green lines on the most recent reading. The scale is inverse so the large drop on the cahrt is actually a large increase in bearish outlook. The current reading is the highest ever in the history of the survey. The next highest reading was in 1990 and occurred just a few days after the bottom of a major leg down in 1990 where the market lost about 20% in 3 months. Taken together with all the other studies showing extreme pessimism, I have to feel more confident that a tradable bottom will occur in the next few days.

This morning we are getting another huge downer which has taken us down (as I type this) to the 127.2% retracement % of the Nov-Jan rally that I have noted in previous posts as the top of what I see as the major reversal zone for this bottom. From the looks of the charts, it seems that a move down to the lower end of the 660-690 zone (or a little further) may occur pretty quickly from this point.


Pete