Investors Intelligence is a survey of 140 financial newsletter
writers that is taken weekly by Michael Burke and his group.
Historically, it has been one of many indicators that strategists
use to gauge market sentiment and it is often viewed as a
contrarian indicator, i.e., a high bullish reading may mean rough
sledding ahead; a high # of bears may signal that we are near a
market bottom.
I have been charting these readings on my own since 3/30/90 (a
date which is meaningful only to myself). Since later that year
we hit our market bottom, Dow 2398, from which we have
headed upward with small interruptions, the readings have not
been as useful as they may have been in choppier environments,
or if the market had stayed down for more than a month or two.
Generally speaking, when the number of bulls or bears is above
60% or below 20%, it certainly is worth noting. In the old days,
it”s my understanding that this occurred fairly frequently. In the
past 9 years, such occurrences are rare. [So rare that since I
started keeping track I count less than 10 weeks where the
percentage of bulls topped 60% — 9 to be specific, 8 of which are
this year– the most recent, and highest, was this past May 28th at
61.6.and a Dow Jones level of 10559, in other words it didn”t
serve as a contrarian indicator this time, while in only 3 weeks
did the level of bears fall below 20% (3 consecutive weeks back
in early 1992)].
During the same 9+ years I have also tracked the level of the
Dow Jones each week. It”s important to note that when you see
the Investors Intelligence reading (you can find it weekly in
Barron”s), there is about a 10-day lag from when the survey was
taken. The survey is released on Wednesday and represents the
accumulation of data from the prior week. So even though you
see it on the following Saturday in Barron”s, it”s really only fair
to match the reading versus the level of the market one week
earlier. Since it”s inexact, in the following table I have matched
the Bull/Bear reading up with the closest Dow level that I deem
appropriate, in this case the weekly close prior to the release of
the survey. [The difference between the Bulls and Bears is
labeled Correction, those advisers who are basically bullish, but
are looking for a short-term pullback. For the purposes of my
table I”m leaving this out].
So, to give you a sense of how this works I went back a year+ (to
cover last summer”s crisis). As I said, this hasn”t been a great
indicator the last few years but I”m bringing it up now because I
guarantee some wide shifts in sentiment the rest of this year. I
will also begin to include it in my Week in Review weekly stat
sheet. **If you are curious about the readings at any particular
point in time since 3/30/90, I”d be happy to supply them to you.
Just send me an e-mail.
Date Dow Bulls Bears
8/13 10973 45.8 29.3
8/6 10714 50.0 29.3
7/30 10655 52.2 27.8
7/23 10921 53.6 24.6
7/16 11209 54.1 27.9
7/9 11193 55.2 26.7
7/2 11139 52.6 27.2
6/25 10552 55.8 25.7
6/18 10855 57.5 26.5
6/11 10490 58.8 26.3
6/4 10799 58.3 28.7
5/28 10559 61.6 27.7
5/21 10829 60.7 28.6
5/14 10913 60.9 28.7
5/7 11031 56.9 31.0
4/30 10789 58.6 27.6
4/23 10689 56.1 30.7
4/16 10493 56.4 30.4
4/9 10173 55.9 30.5
4/2 9832 56.4 31.6
3/26 9822 55.6 31.6
3/19 9903 55.9 29.7
3/12 9876 52.6 29.8
3/5 9736 49.1 32.5
2/26 9307 50.9 32.1
2/19 9339 54.1 31.5
2/12 9274 55.7 28.7
2/5 9304 61.2 25.9
1/29 9358 60.0 26.7
1/22 9120 60.7 28.2
1/15 9341 60.3 28.9
1/8 9643 60.0 30.0
1/1/99 9183 58.0 30.0
12/25 9217 57.1 30.3
12/18 8903 56.4 32.5
12/11 8821 56.8 31.4
12/4 9016 57.4 31.3
11/27 9333 56.9 31.0
11/20 9159 57.9 29.8
11/13 8920 57.0 31.6
11/6 8975 53.1 35.4
10/30 8592 47.8 38.3
10/23 8452 45.3 39.3
10/16 8416 44.0 39.7
10/9 7899 41.0 41.9
10/2 7784 38.5 42.7
9/25 8028 37.6 44.4
9/18 7895 36.2 45.7
9/11 7795 36.4 47.5
9/4 7640 37.3 46.6
8/28 8051 40.7 43.2
8/21 8533 40.4 38.6
8/14 8425 40.7 34.5
8/7 8598 43.4 31.9
7/31 8883 50.0 27.6
7/24 8937 52.5 26.3
7/17 9337 54.3 23.3 *
7/10 9105 52.0 24.0
7/3 9025 41.7 31.7
6/26 8944 44.9 31.4
6/19 8712 42.9 31.9
6/12 8834 42.1 33.3
6/5 9037 41.7 31.7
*With the exception of one other week in April of 1999, this was
the lowest reading since 1992 and it proved to be a market top
for about 4 months.
One other period worth noting was the year between 1/17/92 and
1/15/93. On 1/17/92, there were 60.0% Bulls (the only other
week 60% or higher outside of 1999) and 19.1% Bears (the
lowest figure in the 9 + years of my work). On 1/17 the Dow
was at 3264. One year later, 1/15/93, the Dow stood at 3271.
So, while the market didn”t tank, you would have been better in
cash and the 60/20 rule worked.
[Investors Intelligence is put out by Chartcraft. 30 Church St.,
New Rochelle, NY 10801 (914) 632-0422]
Brian Trumbore
