Bears increase despite new Dow high

Investor psychology remains muted despite the new all-time high in the Dow Industrials.  This week’s AAII investor sentiment survey revealed only a slight increase in the percentage of bullish investors, to 31% from last week’s 28%.  That’s still a remarkably low percentage of bulls given the new highs in the major indices.  The percentage of AAII bears rose to 39% compared to last week’s 36%.  I regard a rising bearish percentage and a low bullish percentage in a bull market as healthy.

Investors Intelligence shows a similarly healthy reading of bulls and bears according to its latest survey.  While the major averages rebounded from their sharp drops on Feb. 25 to end that week with small gains, the bulls declined to 44.2%, the fifth week of lower readings.  There was no change for the bears at 21.1%.  The difference between the bulls and bears declined to 23.1%.  As Art Huprich of Raymond James points out, “That difference is well below the dangerous territory around 30%, and higher.”